S-1905               _______________________________________________

                                         SUBSTITUTE SENATE BILL NO. 5654

                        _______________________________________________

State of Washington                               51st Legislature                              1989 Regular Session

By Senate Committee on Financial Institutions & Insurance (originally sponsored by Senators Lee and Matson)

Read first time 2/20/89.

AN ACT Relating to insurance coverage; and adding a new section to chapter 19.72 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.  A new section is added to chapter 19.72 RCW to read as follows:

          (1) A bond shall not provide any other type of insurance coverage defined in chapter 48.11 RCW, including but not limited to general casualty insurance coverage as defined in RCW 48.11.070, and property insurance coverage as defined in RCW 48.11.040, other than surety insurance coverage.  Language in any contract or bond to the contrary shall be void.  Bond shall mean any form of surety insurance as defined in RCW 48.11.080.

          (2) Unless otherwise specifically provided by statute, even if liability is imposed on the surety's principal or the surety by the contract, bond, or common law, no bond shall be liable for damages based upon or arising out of any:

          (a) Tortious injury to:

          (i) Person (including death); or

          (ii) Real or personal property except as provided in subsection (3) of this section; or

          (b) Failure to have any or adequate insurance coverage.

          (3) Nothing in subsection (2)(a)(ii) of this section prohibits a claim upon a bond for correction of improper work by a principal, where such a claim would otherwise be allowable under the terms of the bond; but the claim, as it relates to damages to property, must be limited strictly to correction of the principal's improper work product.  Work product means the labor of and materials supplied and/or installed by the principal.