Bill Text: TX SB1337 | 2011-2012 | 82nd Legislature | Introduced
Bill Title: Relating to the operation and regulation of certain consolidated insurance programs; providing administrative penalties.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2011-03-22 - Referred to State Affairs [SB1337 Detail]
Download: Texas-2011-SB1337-Introduced.html
82R6568 PMO-F | ||
By: Van de Putte | S.B. No. 1337 |
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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. |