| 1 | The Business Regulation Committee recommends the following: |
| 2 |
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| 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; providing an |
| 19 | effective date. |
| 20 |
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| 21 | Be It Enacted by the Legislature of the State of Florida: |
| 22 |
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| 23 | Section 1. Section 627.442, Florida Statutes, is created |
| 24 | to read: |
| 25 | 627.442 Construction contract insurance provisions; |
| 26 | acceptance, rejection, or application.-- |
| 27 | (1) If a written construction contract requires a |
| 28 | subcontractor, sub-subcontractor, or materialman to provide an |
| 29 | insurance policy or certificate of insurance to the general |
| 30 | contractor or another subcontractor for work performed or |
| 31 | materials provided, which extends coverage rights to an |
| 32 | additional insured, the general contractor or subcontractor is |
| 33 | deemed to have accepted the insurance policy or certificate of |
| 34 | insurance as conforming to the written construction contract |
| 35 | unless the general contractor or subcontractor rejects the |
| 36 | insurance policy or certificate of insurance in writing within 3 |
| 37 | business days after receipt of the insurance policy or |
| 38 | certificate of insurance. The written rejection must specify the |
| 39 | reason for rejection. However, the general contractor or |
| 40 | subcontractor may not be deemed to have accepted an insurance |
| 41 | policy or certificate of insurance that does not comply with the |
| 42 | insurance coverage limits specified in the construction |
| 43 | contract, that was knowingly and fraudulently altered, or that |
| 44 | reflects coverages or conditions that are not contained in the |
| 45 | underlying policy. |
| 46 | (2) After a general contractor or subcontractor accepts an |
| 47 | insurance policy or certificate of insurance or is deemed to |
| 48 | have accepted the insurance policy or certificate of insurance, |
| 49 | a general contractor or subcontractor may not use the lack of |
| 50 | conforming insurance as a reason to reject work previously |
| 51 | completed by a subcontractor or sub-subcontractor, reject |
| 52 | materials previously supplied by a materialman, or withhold |
| 53 | payment for work previously completed or materials previously |
| 54 | supplied. However, the general contractor or subcontractor may |
| 55 | reject work previously completed or materials previously |
| 56 | supplied or withhold payment for such work or materials if the |
| 57 | policy or certificate provided by the subcontractor, sub- |
| 58 | subcontractor, or materialman: |
| 59 | (a) Does not comply with the insurance coverage limits |
| 60 | specified in the construction contract; |
| 61 | (b) Was knowingly and fraudulently altered or reflects |
| 62 | coverages or conditions that are not contained in the underlying |
| 63 | policy; or |
| 64 | (c) Is canceled, nonrenewed, or materially and adversely |
| 65 | altered during the term of the construction contract. |
| 66 | (3) Subsection (1) does not preclude a general contractor |
| 67 | or subcontractor from rejecting as nonconforming an insurance |
| 68 | policy or certificate of insurance previously accepted or deemed |
| 69 | to have been accepted; however, such a rejection shall be in |
| 70 | writing and shall specify the reason for rejection. A general |
| 71 | contractor or subcontractor who rejects in writing an insurance |
| 72 | policy or certificate of insurance as nonconforming and states |
| 73 | the specific reason for such rejection may withhold payment for |
| 74 | the work performed or materials supplied after the date of the |
| 75 | rejection of the policy or certificate. |
| 76 | (4) A policy of insurance issued by an authorized insurer |
| 77 | or self-insurance fund that is subject to ss. 631.901?631.932 |
| 78 | may not be rejected as nonconforming by a general contactor on |
| 79 | the grounds that such authorized insurer or self-insurance fund |
| 80 | is rated or not rated by a nationally recognized insurance |
| 81 | rating service. |
| 82 | Section 2. This act shall take effect July 1, 2006. |