| 1 | The Commerce Council 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.; authorizing a prime contractor or |
| 8 | subcontractor to reject certain insurance policies or |
| 9 | certificates of insurance required by a construction |
| 10 | contract as not evidencing insurance conforming with |
| 11 | contract requirements; providing requirements, procedures, |
| 12 | and limitations on such rejection; providing definitions; |
| 13 | providing limitations on payments for labor, services, or |
| 14 | materials supplied and lien or payment bond claims for |
| 15 | labor, services, or materials supplied under certain |
| 16 | circumstances; specifying additional circumstances for |
| 17 | rejection of certain insurance policies or certificates of |
| 18 | insurance required by a construction contract as not |
| 19 | evidencing insurance conforming with contract |
| 20 | requirements; providing construction relating to tolling |
| 21 | certain time periods for filing certain claims; specifying |
| 22 | nonapplication of construction contract insurance |
| 23 | provisions under certain circumstances; providing |
| 24 | construction; providing for application to certain |
| 25 | contracts; creating s. 627.443, F.S.; prohibiting certain |
| 26 | persons from requiring workers' compensation policies to |
| 27 | be issued by certain entities under certain circumstances; |
| 28 | providing an effective date. |
| 29 |
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| 30 | Be It Enacted by the Legislature of the State of Florida: |
| 31 |
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| 32 | Section 1. Section 627.442, Florida Statutes, is created |
| 33 | to read: |
| 34 | 627.442 Construction contract insurance provisions; |
| 35 | acceptance, rejection, or application.-- |
| 36 | (1) If a written construction contract requires a |
| 37 | subcontractor, sub-subcontractor, or materialman to provide an |
| 38 | insurance policy or certificate of insurance to the prime |
| 39 | contractor or another subcontractor evidencing the extension of |
| 40 | coverage rights to an additional insured, the prime contractor |
| 41 | or subcontractor may reject the policy or certificate as not |
| 42 | sufficiently evidencing insurance conforming to the contract |
| 43 | requirements within 30 business days after receipt for |
| 44 | commercial construction projects or within 7 business days after |
| 45 | receipt for residential construction projects. Any such |
| 46 | rejection must be in writing and must specify the reasons that |
| 47 | the policy or certificate does not sufficiently evidence |
| 48 | insurance conforming to the contract requirements. If a policy |
| 49 | or certificate is rejected as provided in this subsection, no |
| 50 | payment to the subcontractor, sub-subcontractor, or materialman |
| 51 | shall be due for any labor, services, or materials supplied, and |
| 52 | no valid lien or payment bond claim pertaining to such labor, |
| 53 | services, or materials supplied shall exist until the |
| 54 | subcontractor, sub-subcontractor, or materialman obtains and |
| 55 | evidences insurance conforming to the contract requirements. If |
| 56 | the policy or certificate is not rejected as provided in this |
| 57 | subsection, payment may not be withheld by the owner, lender, |
| 58 | prime contractor, or subcontractor based upon the failure of the |
| 59 | subcontractor, sub-subcontractor, or materialman to evidence |
| 60 | insurance conforming to the contract requirements. For purposes |
| 61 | of this section, the term "residential construction project" |
| 62 | means the construction, remodeling, repair, or improvement of a |
| 63 | one-family, two-family, or three-family residence not exceeding |
| 64 | two habitable stories above no more than one uninhabitable story |
| 65 | and accessory use structures in connection with such residences. |
| 66 | For purposes of this section, the term "commercial construction |
| 67 | project" means any construction, remodeling, repair, or |
| 68 | improvement that does not constitute a residential construction |
| 69 | project. |
| 70 | (2) Notwithstanding subsection (1) or subsection (3), no |
| 71 | payment to the subcontractor, sub-subcontractor, or materialman |
| 72 | shall be due for any labor, services, or materials supplied, and |
| 73 | no valid lien or payment bond claim pertaining to such labor, |
| 74 | services, or materials supplied shall exist, until that |
| 75 | subcontractor, sub-subcontractor, or materialman obtains and |
| 76 | evidences insurance conforming to the contract requirements, if: |
| 77 | (a) The policy or certificate does not accurately reflect |
| 78 | the coverages contained in the policy in force; or |
| 79 | (b) The policy is canceled, nonrenewed, or its terms are |
| 80 | materially and adversely altered such that the policy no longer |
| 81 | satisfies the contract requirements. |
| 82 | (3) Nothing in this section prohibits a prime contractor |
| 83 | or subcontractor from rejecting a policy or certificate as not |
| 84 | sufficiently evidencing insurance conforming to the contract |
| 85 | requirements at any point beyond the time periods specified in |
| 86 | subsection (1) if such rejection is in writing and specifies the |
| 87 | reasons for rejection. If a policy or certificate is rejected as |
| 88 | described in this subsection, no payment to the subcontractor, |
| 89 | sub-subcontractor, or materialman shall be due, and no valid |
| 90 | lien or payment bond claim shall exist, for labor, services, or |
| 91 | materials supplied after the rejection is received until that |
| 92 | subcontractor, sub-subcontractor, or materialman obtains and |
| 93 | evidences insurance conforming to the contract requirements. |
| 94 | (4) Nothing in this section shall be construed to toll the |
| 95 | required time period within which a claim of lien or a claim |
| 96 | against a payment bond must be filed. |
| 97 | (5) This section shall not apply if at the time of the |
| 98 | request for proposals or bids, or prior to the subcontractor, |
| 99 | sub-subcontractor, or materialman commencing work or supplying |
| 100 | materials under the construction contract, the prime contractor |
| 101 | or subcontractor provides a sample of an acceptable certificate |
| 102 | of insurance or a one-page schedule accurately reflecting all |
| 103 | insurance requirements which extend coverage rights to an |
| 104 | additional insured for that contract to the subcontractor, sub- |
| 105 | subcontractor, or materialman and the insurance provided by the |
| 106 | subcontractor, sub-subcontractor, or materialman does not comply |
| 107 | with the construction contract. A schedule or sample certificate |
| 108 | of insurance issued under this subsection shall not be deemed to |
| 109 | amend or modify the contract between the parties in any way or |
| 110 | to waive any requirement of the contract unless the schedule or |
| 111 | certificate expressly states that such an amendment, |
| 112 | modification, or waiver is intended. |
| 113 | (6) This section shall apply to contracts entered into on |
| 114 | or after October 1, 2006. |
| 115 | Section 2. Section 627.443, Florida Statutes, is created |
| 116 | to read: |
| 117 | 627.443 Workers' compensation policy |
| 118 | limitations.--Notwithstanding any other provision in this |
| 119 | chapter, any person requiring a workers' compensation policy |
| 120 | pursuant to a construction contract shall not require such |
| 121 | policy to be issued by an insurer or self-insurance fund that is |
| 122 | rated by a nationally recognized insurance rating service, |
| 123 | provided the issuing insurer or self-insurance fund is subject |
| 124 | to part V of chapter 631. |
| 125 | Section 3. This act shall take effect October 1, 2006. |