Colorado HB 10-1394 passes out of the legislature and moves on to the Governor, again

After passing third reading in the Senate on May 4th, HB 10-1394 went to the Governor’s office for the first time.  Because of pressure from insurance companies, the Governor’s office urged the parties interested in HB 10-1394 to continue working on compromise language and threatened that the bill would be vetoed if the parties could not reach an amendment.  Shortly thereafter, Senator Scheffel recalled the bill to the Senate.  The bill received a strike-below amendment on its second third reading in the Senate, the text of which can be found here.  To address the carriers’ concern that the bill would turn a CGL policy into some form of warranty or surety bond, the language in the first part of the bill was changed to read:

IN INTERPRETING A LIABILITY INSURANCE POLICY ISSUED TO A CONSTRUCTION PROFESSIONAL, A COURT SHALL PRESUME THAT THE WORK OF A CONSTRUCTION PROFESSIONAL THAT RESULTS IN PROPERTY DAMAGE, INCLUDING DAMAGE TO THE WORK ITSELF OR OTHER WORK, IS AN ACCIDENT UNLESS THE PROPERTY DAMAGE IS INTENDED AND EXPECTED BY THE INSURED. NOTHING IN THIS SUBSECTION (3): 

     (a) REQUIRES COVERAGE FOR DAMAGE TO AN INSURED’S OWN WORK UNLESS OTHERWISE PROVIDED IN THE INSURANCE POLICY; OR

     (b) CREATES INSURANCE COVERAGE THAT IS NOT INCLUDED IN THE INSURANCE POLICY.

The prohibition on Super-Montrose endorsements found within Section 2 of the bill now reads:

A PROVISION IN A LIABILITY INSURANCE POLICY ISSUED TO A CONSTRUCTION PROFESSIONAL EXCLUDING OR LIMITING COVERAGE FOR ONE OR MORE CLAIMS ARISING FROM BODILY INJURY, PROPERTY DAMAGE, ADVERTISING INJURY, OR PERSONAL INJURY THAT OCCURS BEFORE THE POLICY’S INCEPTION DATE AND THAT CONTINUES, WORSENS, OR PROGRESSES WHEN THE POLICY IS IN EFFECT IS VOID AND UNENFORCEABLE IF THE EXCLUSION OR LIMITATION APPLIES TO AN INJURY OR DAMAGE THAT WAS UNKNOWN TO THE INSURED AT THE POLICY’S INCEPTION DATE.

Finally, the applicability language in the bill, Section 3, reads “This act applies to all insurance policies in existence or issued on or after the effective date of this act.”

Colorado HB 10-1394 passed on its second third reading in the Senate on May 10th.  Yesterday, the House voted to concur with the Senate amendments and to repass the bill.  The bill will now go back to Governor Ritter for his signature.  The conventional wisdom is that because the parties were able to agree on compromise language, the Governor will now sign the bill into law.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.