§ 40.693 — Contractual provisions requiring subcontractor to indemnify controlling party; wrap-up insurance policies

1. In any action or other proceeding involving a constructional defect asserted by a claimant and governed by NRS 40.600 to 40.695 , inclusive:
(a) Except as otherwise provided in paragraph (b), any provision in a contract entered into on or after February 24, 2015, for residential construction that requires a subcontractor to indemnify, defend or otherwise hold harmless a controlling party from any liability, claim, action or cause of action resulting from a constructional defect caused by the negligence, whether active or passive, or intentional act or omission of the controlling party is against public policy and is void and unenforceable.
(b) Except as otherwise provided in paragraph (c), a provision in a contract entered into on or after February 24, 2015, for residential construction is not against public policy and is not void and unenforceable under paragraph (a) to the extent that the provision requires a subcontractor to indemnify, defend or otherwise hold harmless a controlling party from any liability, claim, action or cause of action resulting from a constructional defect arising out of, related to or connected with the subcontractor’s scope of work, negligence, or intentional act or omission.
(c) A provision in a contract entered into on or after February 24, 2015, for residential construction is against public policy and is void and unenforceable under paragraph (a) to the extent that it requires a subcontractor to defend, indemnify or otherwise hold harmless a controlling party from any liability, claim, action or cause of action resulting from a constructional defect arising out of, related to or connected with that portion of the subcontractor’s work which has been altered or modified by another trade or the controlling party.
(d) Except as otherwise provided in paragraph (e), if a provision of a contract entered into on or after February 24, 2015, for residential construction that requires a subcontractor to indemnify, defend or otherwise hold harmless a controlling party is not against public policy and is not void and unenforceable under this subsection, the duty of the subcontractor to defend the controlling party arises upon presentment of a notice pursuant to subsection 1 of NRS 40.646 containing a particular claim, action or cause of action from which it can be reasonably inferred that an alleged constructional defect was caused by or attributable to the subcontractor’s work, negligence, or wrongful act or omission.
(e) If a controlling party gives a notice to a subcontractor pursuant to NRS 40.646 that contains a claim, action or cause of action from which it can be reasonably inferred that an alleged constructional defect was caused by or attributable to the subcontractor’s work, negligence, or wrongful act or omission, the claim, action or cause of action is covered by the subcontractor’s commercial general liability policy of insurance issued by an insurer, and the controlling party is named as an additional insured under that policy of insurance:
(1) The controlling party, as an additional insured, must pursue available means of recovery of its defense fees and costs under the policy before the controlling party is entitled to pursue a claim against the subcontractor.
(2) Upon the final settlement of or issuance of a final judgment in an action involving a claim for a constructional defect, if the insurer has not assumed the controlling party’s defense and reimbursed the controlling party for the defense obligation of the subcontractor, or if the defense obligation is not otherwise resolved by the settlement or final judgment, the controlling party has the right to pursue a claim against the subcontractor for reimbursement of that portion of the attorney’s fees and costs incurred by the controlling party which are attributable to the claims, actions or causes of action arising out of, related to or connected with the subcontractor’s scope of work, negligence, or intentional act or omission.
(3) The provisions of subparagraphs (1) and (2) do not prohibit a controlling party from:
(I) Following the requirements of NRS 40.600 to 40.695 , inclusive, relating to providing notice of an alleged constructional defect or any other procedures set forth in those provisions; or
(II) Filing a third-party complaint against the subcontractor if a claimant commences an action or amends a complaint to add a cause of action for a constructional defect against a controlling party which arises out of, relates to or is otherwise connected with the subcontractor’s scope of work, negligence, or wrongful act or omission.
2. For any wrap-up insurance policy or other consolidated insurance program that covers a subcontractor who performs work on residential construction for which a contract is entered into on or after February 24, 2015, for claims, actions or causes of action for a constructional defect governed by NRS 40.600 to 40.695 , inclusive:
(a) The controlling party obtaining the wrap-up insurance policy or other consolidated insurance program shall disclose the total amount or method of calculation of any credit or compensation for the premium required from a subcontractor or other participant for that wrap-up insurance policy in the contract documents.
(b) Except as otherwise provided in paragraph (c), the contract documents must disclose, if and to the extent known:
(1) The policy limits;
(2) The scope of policy coverage;
(3) The policy term;
(4) The basis upon which the deductible or occurrence is triggered by the insurer;
(5) If the policy covers more than one work of improvement, the number of units, if any, indicated on the application for the insurance policy; and
(6) A good faith estimate of the amount of available limits remaining under the policy as of a date indicated in the disclosure obtained from the insurer.
(c) The disclosure requirements of subparagraphs (1) to (4), inclusive, of paragraph (b) may be satisfied by providing the participant with a copy of the binder or declaration.
(d) The disclosures made pursuant to subparagraphs (5) and (6) of paragraph (b):
(1) May be based upon information available at the time the disclosure is made and are not inaccurate or made in bad faith solely because the disclosures do not accurately reflect the actual number of units covered by the policy or the amount of insurance available, if any, when a later claim is made.
(2) Are presumptively made in good faith if:
(I) The disclosure pursuant to subparagraph (5) of paragraph (b) is the same as that contained in the application to the wrap-up insurance policy insurer; and
(II) The disclosure pursuant to subparagraph (6) of paragraph (b) was obtained from the wrap-up insurance policy insurer or broker.
Ê The presumptions stated in subparagraph (2) may be overcome only by a showing that the insurer, broker or controlling party intentionally misrepresented the facts identified in subparagraph (5) or (6) of paragraph (b).
(e) Upon the written request of any participant in the wrap-up insurance policy or consolidated insurance program, a copy of the insurance policy must be provided, if available, that shows the coverage terms and items in subparagraphs (1) to (5), inclusive, of paragraph (b). If the policy is not available at the time of the request, a copy of the insurance binder or declaration of coverage may be provided in lieu of the actual policy.
(f) Any party receiving a copy of the policy, binder or declaration shall not disclose it to third parties other than the participant’s insurance broker or attorney unless required to do so by law. The participant’s insurance broker or attorney may not disclose the policy, binder or declaration to any third party unless required to do so by law.
(g) If the controlling party obtaining the wrap-up insurance policy or other consolidated insurance program does not disclose the total amount or method of calculation of the premium credit or compensation to be charged to the participant before the time the participant submits its bid, the participant is not legally bound by the bid unless that participant has the right to increase the bid up to the amount equal to the difference between the amount the participant included, if any, for insurance in the original bid and the amount of the actual bid credit required by the controlling party obtaining the wrap-up insurance policy or other consolidated insurance program. This paragraph does not apply if the controlling party obtaining the wrap-up insurance policy or other consolidated insurance program did not require the subcontractor to offset the original bid amount with a deduction for the wrap-up insurance policy or program.
(h) The subcontractor’s monetary obligation for enrollment in the wrap-up insurance policy or consolidated insurance program ceases upon the subcontractor’s satisfaction of its agreed contribution percentage, which may have been paid either as a lump sum or on a pro rata basis throughout the subcontractor’s performance of the work.
(i) In the event of an occurrence, the dollar amount required to be paid by a subcontractor as a self-insured retention or deductible must not be greater than the amount that the subcontractor would have otherwise been required to pay as a self-insured retention or deductible under a commercial general liability policy of comparable insurance in force during the relevant period for that particular subcontractor and within the specific market at the time the subcontract is entered into.
3. As used in this section:
(a) “Controlling party” means a person who owns real property involved in residential construction, a contractor or any other person who is to be indemnified by a provision in a contract entered into on or after February 24, 2015, for residential construction.
(b) “Residential construction” means the construction of a new residence, of an alteration of or addition to an existing residence, or of an appurtenance.
(c) “Wrap-up insurance policy” is an insurance policy, or series of policies, written to cover risks associated with the construction, repair or landscaping of a new residence, of an alteration of or addition to an existing residence, or of an appurtenance, and covering two or more of the contractors or subcontractors that work on that construction, repair or landscaping.

Legislative History

(Added to NRS by 2015, 4 )