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