BILL NUMBER: AB 1236	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Hagman

                        FEBRUARY 22, 2013

   An act to amend Section 7071.19 of the Business and Professions
Code, relating to contractors.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1236, as introduced, Hagman. Contractors: limited liability
companies.
   The Contractors' State License Law provides for the licensure and
regulation of contractors by the Contractors' State License Board.
Existing law authorizes the Contractors' State License Board to issue
a contractor's license to a limited liability company, but requires,
as a condition precedent to the issuance, reissuance, reinstatement,
reactivation, renewal, or continued valid use of a limited liability
company contractor's license, that the applicant or licensee file or
have on file a surety bond for damages arising out of specified
claims of employees. Existing law also requires the limited liability
company to maintain a policy or policies of insurance against
liability imposed on or against it for damages arising out of claims,
as specified, as a condition of licensure. Under existing law, the
policy or policies of insurance secured to satisfy these provisions
are required to be written by an insurer or insurers duly licensed by
this state.
   This bill would additionally permit those policies to be written
by an eligible surplus lines insurer.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 7071.19 of the Business and Professions Code is
amended to read:
   7071.19.  (a) As a condition of the issuance, reinstatement,
reactivation, or continued valid use of a license under this chapter,
in addition to any bond required under this article, a limited
liability company shall, in accordance with  the provisions
of  this section, maintain a policy or policies of insurance
against liability imposed on or against it by law for damages
arising out of claims based upon acts, errors, or omissions arising
out of the contracting services it provides.
   (b) The total aggregate limit of liability under the policy or
policies of insurance required under this section shall be as
follows:
   (1) For a limited liability company licensee with five or fewer
persons listed on the members of the personnel of record, the
aggregate limit shall not be less than one million dollars
($1,000,000).
   (2) For a limited liability company licensee with more than five
persons listed on the members of the personnel of record, an
additional one hundred thousand dollars ($100,000) of insurance shall
be obtained for each person listed on the personnel of record of the
licensee except that the maximum amount of insurance is not required
to exceed five million dollars ($5,000,000) in any one designated
period, less amounts paid in defending, settling, or discharging
claims as set forth under this section.
   (c) The policy or policies required by this section may be issued
on a claims-made or occurrence basis, and shall cover: (1) in the
case of a claims-made policy, claims initially asserted in the
designated period, and (2) in the case of an occurrence policy,
occurrences during the designated period. For purposes of this
section, "designated period" means a policy year or any other period
designated in the policy that is not greater than 12 months. Any
policy or policies secured to satisfy  the provisions of
 this section shall be written by an insurer or insurers
duly licensed by this state  or an eligible surplus lines insurer
 , and may be in a form reasonably available in the commercial
insurance market and may be subject to those terms, conditions,
exclusions, and endorsements that are typically contained in those
policies. A policy or policies of insurance maintained pursuant to
this section may be subject to a deductible or self-insured
retention.
   (d) The impairment or exhaustion of the aggregate limit of
liability by amounts paid under any policy in connection with the
settlement, discharge, or defense of claims applicable to a
designated period shall not require the licensee to acquire
additional insurance coverage for that designated period. However,
the aggregate limit of liability coverage (coverage limit) required
by this section shall be reinstated by not later than the
commencement date of the next designated period, and the license of
any licensee that fails to comply with this provision shall be
suspended by operation of law until the date that the licensee
complies with the coverage limit requirements of this section. In
addition, the amount to which any coverage limit is depleted may be
reported on the license record.
   (e) Upon the dissolution and winding up of the company, the
company shall, with respect to any insurance policy or policies then
maintained pursuant to this section, maintain or obtain an extended
reporting period endorsement or equivalent provision in the maximum
total aggregate limit of liability required to comply with this
section for a minimum of three years if reasonably available from the
insurer.
   (f) Prior to the issuance, reinstatement, or reactivation of a
limited liability company license as provided under this chapter, the
applicant or licensee shall, in the manner prescribed by the
registrar, submit the information and documentation required by this
section and requested by the registrar, demonstrating compliance with
the financial security requirements specified by this section.
   (g) For any insurance policy secured by a licensee in satisfaction
of this section, a Certificate of Liability Insurance, signed by an
authorized agent or employee of the insurer, shall be submitted
electronically or otherwise to the registrar. The insurer issuing the
certificate shall report to the registrar the following information
for any policy required under this section: name, license number,
policy number, dates that coverage is scheduled to commence and
lapse, the date and amount of any payment of claims, and cancellation
date if applicable.
   (h) Upon the issuance, reinstatement, or reactivation of a license
under this section, the registrar may post the following information
to the licensee's license record on the Internet:
   (1) The name of the insurer or insurers providing the liability
policy or policies submitted by the licensee for the most recent
designated period.
   (2)  The   Any    policy
 number(s)   numbers  and the sum of the
aggregate limit of liability provided by each.