SENATE BILL REPORT

 

 

                                    SB 5694

 

 

BYSenators von Reichbauer, Moore, Matson, Smitherman, Johnson, Rasmussen and Bender

 

 

Regulating allowable provisions in construction contracts.

 

 

Senate Committee on Financial Institutions & Insurance

 

      Senate Hearing Date(s):February 16, 1989; February 28, 1989

 

Majority Report:  That Substitute Senate Bill No. 5694 be substituted therefor, and the substitute bill do pass.

      Signed by von Reichbauer, Chairman; Johnson, Vice Chairman; McMullen, Matson, Moore, Rasmussen, Sellar, Smitherman.

 

      Senate Staff:Bev Tweddle (786-7403)

                  February 28, 1989

 

 

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE, FEBRUARY 28, 1989

 

BACKGROUND:

 

A project owner may require a contractor to include the owner as an insured party in the contractor's liability insurance policy as a condition to entering into a contract.  If there are also subcontractors needed for the project, the general contractor may require the subcontractors to include the general contractor as an insured party in their liability insurance policy.

 

Additionally, present law allows a contractor to give up protection from litigation provided under the industrial insurance law.

 

SUMMARY:

 

Any contract provision by a project owner requiring a contractor to include the owner or any other contractor in the liability insurance policy of another is void and not enforceable.

 

A contractor may not give up his right to protection from litigation provided under the industrial insurance law.

 

A project owner may obtain liability insurance for a general contractor, subcontractor or specialty contractor.

 

 

EFFECT OF PROPOSED SUBSTITUTE:

 

Original language of the code is restored as it relates to waiver under industrial insurance law.  Surety insurers are exempt from this revision to the existing code.

 

Appropriation:    none

 

Revenue:    none

 

Fiscal Note:      requested February 20, 1989

 

Senate Committee - Testified: Joe Devish, Madsen Electric (pro); Jim Bush, Department of Transportation (con); Larry Stevens, NECA, MCA (pro); Bob Cochren, Cochren Electric (pro); Ron Leaders, Architects/Engineers Legislative Council (con); Delbert Johnson, AG (con); Chris Clark, W.G. Construction Co., Inc. (pro); Duke Schaub, AGC (pro); Doug Bohlke, CBIC (pro)