HB 0173

CS

CHAMBER ACTION

1	The Civil Justice Committee recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to construction contracts; creating s.
7	627.442, F.S.; specifying acceptance of certain insurance
8	provisions of a construction contract under certain
9	circumstances; providing exceptions; prohibiting certain
10	actions after acceptance of such provisions; providing an
11	exception authorizing such actions under certain
12	circumstances; authorizing contractors or subcontractors
13	to reject certain accepted construction contract insurance
14	provisions as nonconforming under certain circumstances;
15	authorizing such contractors and subcontractors to
16	withhold payment for work performed or materials supplied
17	under certain circumstances; prohibiting rejecting certain
18	policies of insurance on certain grounds; specifying
19	nonapplication of construction contract insurance
20	provisions under certain circumstances; providing
21	construction; providing for application to certain
22	contracts; providing an effective date.
23
24	Be It Enacted by the Legislature of the State of Florida:
25
26	Section 1.  Section 627.442, Florida Statutes, is created
27	to read:
28	627.442  Construction contract insurance provisions;
29	acceptance, rejection, or application.--
30	(1)  If a written construction contract requires a
31	subcontractor, sub-subcontractor, or materialman to provide an
32	insurance policy or certificate of insurance to the general
33	contractor or another subcontractor for work performed or
34	materials provided, which extends coverage rights to an
35	additional insured, the general contractor or subcontractor is
36	deemed to have accepted the insurance policy or certificate of
37	insurance as conforming to the written construction contract
38	unless the general contractor or subcontractor rejects the
39	insurance policy or certificate of insurance in writing within
40	30 business days for commercial construction projects and 7
41	business days for residential construction projects after
42	receipt of the insurance policy or certificate of insurance. The
43	written rejection must specify the reason for rejection.
44	However, the general contractor or subcontractor may not be
45	deemed to have accepted an insurance policy or certificate of
46	insurance that does not comply with the insurance coverage
47	limits specified in the construction contract, that was
48	knowingly and fraudulently altered, or that reflects coverages
49	or conditions that are not contained in the underlying policy.
50	(2)  After a general contractor or subcontractor accepts an
51	insurance policy or certificate of insurance or is deemed to
52	have accepted the insurance policy or certificate of insurance,
53	a general contractor or subcontractor may not use the lack of
54	conforming insurance as a reason to reject work previously
55	completed by a subcontractor or sub-subcontractor, reject
56	materials previously supplied by a materialman, or withhold
57	payment for work previously completed or materials previously
58	supplied. However, the general contractor or subcontractor may
59	reject work previously completed or materials previously
60	supplied or withhold payment for such work or materials if the
61	policy or certificate provided by the subcontractor, sub-
62	subcontractor, or materialman:
63	(a)  Does not comply with the insurance coverage limits
64	specified in the construction contract;
65	(b)  Was knowingly and fraudulently altered or reflects
66	coverages or conditions that are not contained in the underlying
67	policy; or
68	(c)  Is canceled, nonrenewed, or materially and adversely
69	altered during the term of the construction contract.
70	(3)  Subsection (1) does not preclude a general contractor
71	or subcontractor from rejecting as nonconforming an insurance
72	policy or certificate of insurance previously accepted or deemed
73	to have been accepted; however, such a rejection shall be in
74	writing and shall specify the reason for rejection. A general
75	contractor or subcontractor who rejects in writing an insurance
76	policy or certificate of insurance as nonconforming and states
77	the specific reason for such rejection may withhold payment for
78	the work performed or materials supplied after the date of the
79	rejection of the policy or certificate.
80	(4)  A policy of insurance issued by an authorized insurer
81	or self-insurance fund that is subject to ss. 631.901?631.932
82	may not be rejected as nonconforming by a general contactor on
83	the grounds that such authorized insurer or self-insurance fund
84	is rated or not rated by a nationally recognized insurance
85	rating service.
86	(5)  This section shall not apply if at the time of the
87	request for proposals or bids, or prior to the subcontractor,
88	sub-subcontractor, or materialman commencing work or supplying
89	materials under the construction contract, the general
90	contractor or subcontractor provides a sample of an acceptable
91	certificate of insurance or a one-page schedule accurately
92	reflecting all insurance requirements which extend coverage
93	rights to an additional insured for that contract to the
94	subcontractor, sub-subcontractor, or materialman and the
95	insurance provided by the subcontractor, sub-subcontractor, or
96	materialman does not comply with the construction contract. A
97	schedule or sample certificate of insurance issued under this
98	subsection shall not be deemed to amend or modify the contract
99	between the parties in any way or to waive any requirement of
100	the contract unless the schedule or certificate expressly states
101	that such an amendment, modification, or waiver is intended.
102	(6)  This section shall apply to contracts entered into on
103	or after July 1, 2006.
104	Section 2.  This act shall take effect July 1, 2006.

CODING: Words stricken are deletions; words underlined are additions.