82R6568 PMO-F
By: Van de Putte S.B. No. 1337
A BILL TO BE ENTITLED
AN ACT
relating to the operation and regulation of certain consolidated
insurance programs; providing administrative penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 2, Insurance Code, is amended by adding
Subtitle C to read as follows:
SUBTITLE C. PROGRAMS AFFECTING MULTIPLE LINES OF INSURANCE
CHAPTER 151. CONSOLIDATED INSURANCE PROGRAMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 151.001. DEFINITIONS. In this chapter:
(1) "Consolidated insurance program" means a program
under which a principal provides general liability insurance
coverage, workers' compensation insurance coverage, or both that
are incorporated into an insurance program for a single
construction project or multiple construction projects.
(2) "Construction project" means construction,
remodeling, maintenance, or repair of improvements to real
property. The term includes the immediate construction location
and areas incidental and necessary to the work as defined in the
construction contract documents. A construction project under this
chapter does not include a single-family home, duplex, triplex, or
quadruplex.
(3) "Contractor" means any person who has entered into
a construction contract or a professional services contract and is
enrolled in the consolidated insurance program.
(4) "Insurer" means an insurance company, including a
mutual insurance company or a capital stock company, a reciprocal
or interinsurance exchange, a Lloyd's plan, or another legal entity
authorized to engage in the business of general liability insurance
or workers' compensation insurance in this state. The term
includes an eligible surplus lines insurer.
(5) "Principal" means the person who procures the
insurance policy under a consolidated insurance program.
Sec. 151.002. RULES. The commissioner shall adopt rules in
the manner provided by Subchapter A, Chapter 36, as necessary to
implement and enforce the purpose and intent of this chapter.
[Sections 151.003-151.050 reserved for expansion]
SUBCHAPTER B. GENERAL REQUIREMENTS
Sec. 151.051. COVERAGE OF CONTRACTORS. (a) Each
contractor on a construction project covered by a consolidated
insurance program must:
(1) be included as a named insured on each insurance
policy under the program; and
(2) have equal rights under the policy with the
principal and other contractors, subject to insurance industry
standard differences between a first-named insured and a named
insured.
(b) Subsection (a) does not apply to a policy that is issued
individually in the name of the contractor as the first-named
insured under a consolidated insurance program.
Sec. 151.052. DURATION OF GENERAL LIABILITY COVERAGE. A
consolidated insurance program that provides completed operations
insurance coverage separate from or together with general liability
coverage must continue completed operations insurance coverage
until the expiration of the limitations period for bringing an
action for damages under Section 16.009, Civil Practice and
Remedies Code.
Sec. 151.053. NOTICE REGARDING REDUCTION IN LIMIT. (a)
Each contractor shall be notified in writing not later than the 10th
day after the date that the principal becomes aware that the total
limit of liability for any type of coverage issued under the
consolidated insurance program is reduced by:
(1) 50 percent; and
(2) each additional 25 percentage point reduction
after the initial 50 percent reduction.
(b) The reduction in the limit under Subsection (a) shall be
computed based on incurred losses and expenses.
Sec. 151.054. DUTY AND COMPLIANCE BY PRINCIPAL. A
principal under a consolidated insurance program owes a duty to
each contractor covered under the consolidated insurance program to
comply with the requirements of this chapter. The duty includes:
(1) payment of the premium for the insurance coverage;
and
(2) securing replacement insurance that meets the
requirements of this chapter, or reimbursing an enrolled contractor
for the cost of replacement insurance that meets the requirements
of this chapter, if the insurer of the consolidated insurance
program fails to continue to provide the coverage required under
the program or if the principal elects to discontinue providing
coverage under the program.
Sec. 151.055. CONTRACTOR INSURANCE. This chapter, or a
requirement of a contract entered into under this chapter, may not
be construed to prevent a contractor from obtaining any insurance
coverage not provided by the consolidated insurance program to
protect the contractor or the construction project.
Sec. 151.056. LIMITED EXCEPTION TO RATING STANDARDS.
Sections 2053.002 and 2251.052, Insurance Code, and Section 1,
Chapter 50 (H.B. 32), Acts of the 53rd Legislature, Regular
Session, 1953 (Article 5.77, Vernon's Texas Insurance Code), do not
apply to rates used for an insurance policy issued under a
consolidated insurance program under this chapter to the extent
that those laws require an insurer to produce rates for individual
risks.
Sec. 151.057. PAYMENT OF CERTAIN DEDUCTIBLES OR LOSSES.
(a) A principal shall pay:
(1) any coverage deductible, self-insured retention,
or loss in a retrospective rating plan or other loss-sensitive
rating plan under a consolidated insurance program; and
(2) all deductible and self-insured retention
applicable to any policy provided under the consolidated insurance
program, except as provided by Subsection (b).
(b) A principal may not assess a contractor covered under
the consolidated insurance program for a deductible, self-insured
retention, or loss described by Subsection (a), except for a
first-party property damage claim deductible or self-insured
retention if:
(1) the action of the contractor caused the property
damage claim; and
(2) the insurance carrier assesses the deductible or
self-insured retention against the principal.
(c) If the principal fails to pay a deductible, self-insured
retention, or other item required of the principal by this section,
a contractor covered under the program may not be required to pay
the deductible, self-insured retention, or other item required of
the principal.
[Sections 151.058-151.100 reserved for expansion]
SUBCHAPTER C. COVERAGE LIMITS
Sec. 151.101. GENERAL REQUIREMENTS. Subject to Section
151.052, aggregate and per-occurrence limits of all general
liability insurance and employer liability coverages under a
consolidated insurance program apply collectively to all
contractors under the program for the duration of each construction
project covered by the program.
[Sections 151.102-151.150 reserved for expansion]
SUBCHAPTER D. DISCLOSURE REQUIREMENTS FOR
ADMINISTRATION OF CONSOLIDATED INSURANCE PROGRAM
Sec. 151.151. REQUIRED DISCLOSURE AT BID SOLICITATION. At
the time a principal or contractor is soliciting bids for a
construction project that may be covered by a consolidated
insurance program, the principal or contractor must disclose
prominently in the project specifications or any request for bids
or proposals that the project may be covered by a consolidated
insurance program subject to this chapter and provide information
about the consolidated insurance program sufficient for a bidder to
understand the program's cost to and coverage for the bidder.
[Sections 151.152-151.200 reserved for expansion]
SUBCHAPTER E. PROGRAM ADMINISTRATION
Sec. 151.201. ADMINISTRATOR. Each principal shall appoint
a qualified administrator for the consolidated insurance program
whose primary duties to the principal and each contractor are to:
(1) administer the program; and
(2) comply with the requirements of this chapter.
[Sections 151.202-151.250 reserved for expansion]
SUBCHAPTER F. ENFORCEMENT PROVISIONS
Sec. 151.251. GENERAL ENFORCEMENT; ADMINISTRATIVE
PENALTIES. The commissioner may impose a sanction under Chapter
82, issue a cease and desist order under Chapter 83, or assess an
administrative penalty under Chapter 84 on any person regulated by
the department who violates this chapter or a rule or order adopted
by the commissioner under this chapter.
[Sections 151.252-151.300 reserved for expansion]
SUBCHAPTER G. NONWAIVER
Sec. 151.301. NONWAIVER. A provision of this chapter may
not be waived by contract or otherwise.
SECTION 2. Chapter 151, Insurance Code, as added by this
Act, applies only to a new or renewed consolidated insurance
program for a construction project that begins on or after January
1, 2012. A consolidated insurance program for a construction
project that begins before January 1, 2012, is governed by the law
as it existed immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2011.