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SECTION 2. Subchapter A,
Chapter 151, Insurance Code, is amended by adding Sections 151.003 through
151.008 to read as follows:
Sec. 151.003. INFORMATION
REQUIRED TO BE PROVIDED BY A PRINCIPAL PRIOR TO ENTERING INTO A CONSTRUCTION
CONTRACT. Not less than 10 days before the date a principal enters into a
construction contract with a person, and the contract contains a
requirement for the person to enroll in a consolidated insurance program,
the principal shall provide to the person the following information about
the consolidated insurance program:
(1) contact information,
including phone and email addresses for the program administrator, the
principal's risk manager, and the insurance company's contact person for
filing a claim for each type of insurance coverage provided in the program;
(2) criteria for
eligibility of enrollment into the program;
(3) a description of the
project site to which the program coverages apply;
(4) a summary of
insurance coverages to be provided to the contractor under the program,
including:
(A) the policy form
number and issuing organization name for a standardized insurance policy or
a sample policy form if not a standardized form;
(B) per occurrence and
aggregate limits of insurance coverage and any sublimits that may apply;
(C) term of coverage for
each limit and sublimit; and
(D) material endorsements
to the policy described in Paragraph (A);
(5) a summary of
insurance coverages to be provided by the contractor;
(6) instructions to a
person on how to include or exclude costs of insurance provided by the
program in the person's proposal for work on the construction project;
(7) a description of the
audit or claims procedures related to the program that could result in a
contractor's responsibility for any additional costs, including the calculation for any assessment to a
contractor related to the principal's payment of a policy deductible, and
including specific monetary amounts related to those costs; and
(8) a description of a
contractor's duties related to:
(A) reporting of payroll
and retention of documentation; and
(B) reporting of claims
and participation in safety inspections and incident reporting.
Sec. 151.004. INFORMATION
REQUIRED TO BE PROVIDED BY A CONTRACTOR PRIOR TO ENTERING INTO A
CONSTRUCTION CONTRACT WITH A PERSON. Not less than 10 days before the date
a contractor enters into a construction contract with a person, and the
contract contains a requirement for the person to enroll in a consolidated
insurance program, the contractor shall provide to the person the
information about the consolidated insurance program listed in Section
151.003.
Sec. 151.005. RELIANCE ON
INFORMATION PROVIDED PRIOR TO ENTERING INTO CONTRACT; FAILURE TO FURNISH.
(a) The information that
is required to be provided under Section 151.003 shall accurately reflect those terms of the consolidated insurance
program. A contractor providing information to a person under Section
151.004 shall accurately provide the information that the contractor
received regarding the terms of the consolidated insurance program.
A person receiving the information under Section 151.003 or 151.004 may
justifiably rely on the information to guide its decision on whether to
enter into a contract that requires the person to enroll in the
consolidated insurance program.
(b) If a person is not timely provided the information required to
be provided under Section 151.003 or 151.004, the person may elect not to
enroll in the consolidated insurance program.
(c) If a person elects
not to enroll under Subsection (b), a principal or contractor may provide
to that person the information about the consolidated insurance program
listed in Section 151.003 and the person will then have 10 days after the
date the information is provided to elect to enter into the construction
contract.
(d) If the person elects
not to enroll in the consolidated insurance program under Subsection (b) or
(c) and the person enters into a construction contract for the construction
project, the person shall furnish insurance coverage for its work on the
construction project in substantial compliance with what is required for a
person that is not covered by an insurance policy under the consolidated
insurance program.
(e) A person that provides
insurance coverage under Subsection (d) shall be compensated by the party
with which the person has entered into the construction contract for the
person's actual cost of its insurance coverage.
(f) A person may not be required to enter into a construction
contract that contains a requirement for the person to enroll in the
consolidated insurance program unless the person has been provided the
information about the consolidated insurance program listed in Section
151.003 at least 10 days prior to the date the agreement is entered into.
Sec. 151.006. REQUEST FOR
INSURANCE POLICY; DEADLINE TO PROVIDE. A contractor may request in writing
from the principal, or from the party with which it has a direct
contractual relationship, a complete copy of the insurance policy that
provides coverage for the contractor under the consolidated insurance
program. A complete copy of the insurance policy must be provided to the
requesting contractor by the later of the:
(1) 30th day after the
date the request was sent; or
(2) 60th day after the
date work covered by the consolidated insurance program commences on the
construction project.
Sec. 151.007. FAILURE TO
PROVIDE INSURANCE POLICY. If the requesting contractor has made a request
under Section 151.006 of the party with which it has a direct contractual
relationship, it shall be a material breach of the requesting contractor's
construction contract under this chapter if the requesting contractor is
not provided the information under Section 151.006 by the later of the:
(1) 75th day after the
date of the request; or
(2) 60th day after the date work covered by
the consolidated insurance program commences on the construction project.
Sec. 151.008. ELECTRONIC
DELIVERY. (a) If the contractor requesting information under this
subchapter expressly requests that the information be provided in written
form, the principal or contractor shall provide the items in written form
to the requesting contractor.
(b) If the contractor
requesting information has not made an express request for the information
under this subchapter to be provided in written form and a principal or
contractor chooses to provide the information required under this
subchapter by electronic delivery, the principal or contractor may comply
with the information delivery requirements in this subchapter by:
(1) electronic
transmission by facsimile or email; or
(2) providing access to
the required information on the principal's, or its agent's, Internet
website.
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SECTION 2. Subchapter A,
Chapter 151, Insurance Code, is amended by adding Sections 151.003 through
151.009 to read as follows:
Sec. 151.003. INFORMATION
REQUIRED TO BE PROVIDED BY PRINCIPAL BEFORE ENTERING CONSTRUCTION CONTRACT.
If a construction contract requires a person to enroll in a consolidated
insurance program, not later than the 10th day before the date a principal
enters into the contract with the person, the principal shall provide the
following information about the consolidated insurance program to the
person:
(1) contact information,
including phone number and e-mail address, for:
(A) the program
administrator;
(B) the principal's risk
manager; and
(C) the insurer's contact
person for filing a claim for each type of insurance coverage provided in
the program;
(2) the criteria for
eligibility of enrollment into the program;
(3) a description of the
project site covered by the program coverages;
(4) a summary of
insurance coverages to be provided to the contractor under the program,
including:
(A) the policy form
number and issuing organization if the policy is a standardized insurance
policy or, if the policy is not standardized, a sample policy form;
(B) per occurrence and
aggregate limits of insurance coverages and any sublimits that may apply;
(C) term of coverages for
each limit and sublimit, if any; and
(D) any material
endorsements to the policy described under Paragraph (A);
(5) a summary of
insurance coverages to be provided by the contractor;
(6) instructions on how
to include or exclude costs of insurance provided by the program in the
person's proposal for work on the construction project;
(7) a description of the
audit or claims procedures related to the program that may result in
additional cost to a contractor, including the method of calculation for any assessment charged to a
contractor related to the principal's payment of a policy deductible and
any other specific cost amounts; and
(8) a description of a
contractor's duties related to reporting:
(A) payroll and retention
of documentation; and
(B) claims and
participation in safety inspections and incident reporting.
Sec. 151.004. INFORMATION
REQUIRED TO BE PROVIDED BY CONTRACTOR BEFORE ENTERING CONSTRUCTION
CONTRACT. If a construction contract requires a person to enroll in a
consolidated insurance program, not later than the 10th day before the date
a contractor enters into the contract with the person, the contractor must
provide to the person, in an accurate form, the information listed in
Section 151.003 that the contractor received under that section.
Sec. 151.005. RELIANCE ON
INFORMATION PROVIDED.
The information required
under Section 151.003 must be accurate,
and a person who receives the information under Section 151.003 or 151.004
may justifiably rely on the information to decide whether to enter into the
construction contract.
Sec. 151.006. FAILURE TO
FURNISH. (a) A person may not be required
to enter into a construction contract that requires enrollment in a
consolidated insurance program unless the person is provided the information
in compliance with Section 151.003 or 151.004, as applicable. If the
information required under Section 151.003 is not provided to a person
within the 10-day period under Section 151.003 or 151.004, as applicable,
the person may elect not to enroll in the consolidated insurance program.
(b) If a person elects
not to enroll in the consolidated insurance program under Subsection (a), a
principal or contractor may provide the person with the information
required under Section 151.003 after the 10-day period under Section
151.003 or 151.004, as applicable. The person must elect whether to enroll
in the consolidated insurance program not later than the 10th day after the
date that the information is provided under this subsection.
(c) If a person elects
not to enroll in the consolidated insurance program under Subsection (a) or
(b) and enters into a construction contract for the construction project,
the person must obtain insurance coverage for the person's work on the
project that substantially complies with the coverage terms and liability
limits imposed for other persons who work on the construction project but
who are not insured under the consolidated insurance program.
(d) The principal or
contractor, as applicable, shall compensate a person with whom the
principal or contractor contracts and who obtains insurance coverage under
Subsection (c) for the actual cost of that insurance coverage.
Sec. 151.007. REQUEST FOR
INSURANCE POLICY; DEADLINE TO PROVIDE. (a) A contractor may request in
writing from the principal, or from the party with which the contractor has
a direct contractual relationship, a complete copy of the insurance policy
that provides coverage for the contractor under the consolidated insurance
program.
(b) The copy described by
Subsection (a) must be provided to the requesting contractor not later than
the later of:
(1) the 30th day after
the date the request was sent; or
(2) the 60th day after
the date the contractor's work covered by the consolidated insurance
program begins on the construction project.
Sec. 151.008. FAILURE TO
PROVIDE INSURANCE POLICY. It is a material breach of a contractor's
construction contract if a complete copy of the insurance policy requested
by the contractor under Section 151.007 is not provided before the later
of:
(1) the 75th day after
the date the request was sent; or
(2) the 90th day after the date the contractor's
work covered by the consolidated insurance program begins on the
construction project.
Sec. 151.009. ELECTRONIC
DELIVERY. (a) On a person's express request, a principal or contractor
shall provide information under this subchapter in hard copy written form.
(b) If a person does not
expressly request information be provided in hard
copy written form, the principal or contractor may comply with the
requirements of this chapter by:
(1) transmitting the
information by facsimile or e-mail; or
(2) allowing access to
the information on the principal's, or the principal's agent's, Internet
website.
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SECTION 3. Sections 151.003 through 151.008, Insurance Code,
as added by this Act, apply only to a construction contract that is entered
into on or after January 1, 2016. A construction contract that is entered
into before January 1, 2016, 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.
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SECTION 3. The changes in law made by this Act apply only to
an original construction contract with an owner of an improvement or
contemplated improvement that is entered into on or after January 1, 2016.
If a construction contract with an owner of an improvement or contemplated
improvement is entered into on or after January 1, 2016, the changes in law
made by this Act apply to a related subcontract, purchase order contract,
personal property lease agreement, consolidated insurance program, and
insurance policy. If a construction contract with an owner of an
improvement or contemplated improvement is entered into before January 1,
2016, that original construction contract and a related subcontract,
purchase order contract, personal property lease agreement, consolidated
insurance program, and insurance policy are governed by the law in effect
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
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