HOUSE BILL REPORT

ESB 5882

As Amended by the House

BYSenators Moore and Patterson

Authorizing contractors to deposit cash or securities to meet insurance requirements.

House Committe on Commerce & Labor

Majority Report:  Do pass.  (11)

      Signed by Representatives Wang, Chair; Cole, Vice Chair, Fisch, Fisher, R. King, O'Brien, Patrick, Sanders, Sayan, C. Smith and Walker.

House Staff:Chris Cordes (786-7117)

AS PASSED HOUSE APRIL 17, 1987

BACKGROUND:

As a requirement of registration, construction contractors must have public liability and property damage insurance of $20,000 for property damage, $50,000 for injury or death to any one person, and $100,000 for injury or death to more than one person. If the insurance ceases to be effective, the contractor's registration is suspended by the Department of Labor and Industries until the insurance is reinstated.

SUMMARY:

To register or re-register as a construction contractor, an applicant must furnish insurance or financial responsibility in the form of an assigned account in the amount of $20,000 for property damage, $50,000 for injury or death to one person and $100,000 for injury or death to more than one person.  Failure to maintain the insurance or financial responsibility is cause to suspend or deny a contractor's registration.

Proof of financial responsibility may be provided with an assigned account acceptable to the Department of Labor and Industries.  The department is required to hold the account to satisfy judgments issued against the contractor for damages occurring in the contractor's operations.  The department's liability is limited to the amount of the account.  The assignment of the account may be canceled three years after the contractor's license has expired or insurance has been purchased if no legal action has been instituted against the contractor.  A contractor who chooses to file an assigned account in lieu of insurance must notify customers that recovery from the account on a claim against the contractor will require a court judgment.

Fiscal Note:      Requested March 26, 1987.

House Committee ‑ Testified For:    Artie Robersen, Department of Labor and Industries (with concerns);  R.O. Pyle.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    The cost of the construction contractor's mandatory insurance is nearly prohibitive for some contracting fields.  Alternatives, such as deposits in lieu of insurance, would provide continued protection to consumers, but ease the requirements for contractors.

House Committee - Testimony Against:      None Presented.