Bill Summary for H 922 (2019-2020)

Printer-friendly: Click to view

Summary date: 

Jun 27 2019

Bill Information:

View NCGA Bill Details2019-2020 Session
House Bill 922 (Public) Filed Tuesday, April 16, 2019
Intro. by D. Hall, Lewis, Arp.

View: All Summaries for BillTracking:

Bill summary

Senate committee substitute eliminates the previous provisions of the 1st edition and instead provides the following.

Section 1

Enacts GS 115C-523.1 to require local boards of education to insure at least 80% of the current insurable value of each of its insurable buildings, as well as insure the equipment and contents of the building. Requires local taxing authorities to appropriate necessary funds for compliance. Authorizes local boards to purchase insurance from licensed and authorized insurance companies in the state or to obtain insurance through the State pursuant to Article 31A of GS Chapter 58, as enacted. Authorizes the Commissioner of Insurance (Commissioner) to order a civil penalty for each separate violation as specified under current law, with every 24 hours without insurance constituting a separate violation.

Enacts GS 115C-523.2 to require local boards to provide flood insurance of at least 80% of the current insurable value of each of its insurable buildings when the property is located or becomes located in an area identified on the latest Flood Insurance Rate Map as an area that will be inundated by the flood event having a 1% chance of being equaled or exceeded in any given year. Requires local taxing authorities to appropriate necessary funds for compliance. Provides identical provisions concerning local board's authority to obtain the required insurance and the Commissioner's enforcement authority as that provided in new GS 115C-523.1.

Enacts GS 115C-238.66(14) to require the regional school boards of directors to comply with the insurance requirements of new GS 115C-523.1 and GS 115C-523.2 for any regional school building owned by the board of directors.

Section 2

Amends GS 115C-58.11 to make the insurance requirements for community college buildings and contents mirror the requirements of new GS 115C-523.1, including allowing boards of trustees to obtain required insurance through the State pursuant to Article 31 of GS Chapter 58. Additionally, enacts GS 115D-58.11A to require community college boards of trustees to comply with the same flood insurance requirements as those enacted for public schools in GS 115-523.2.

Section 3

Transfers all functions, powers, duties, obligations, resources, and appropriations vested in the State Board of Education, the Superintendent of Public Instruction, and the School Insurance Fund Section of the Department of Public Instruction (DPI) for management and operation of a system of insurance for public education property to the Department of Insurance (DOI) and the Commissioner of Insurance, as a Type I transfer. Authorizes the Commissioner, DOI, and the Office of State Budget and Management to take necessary steps to consolidate the system into DOI. Further, directs the State Treasurer to transfer the balance of the Public School Insurance Fund to the State Public Education Property Insurance Fund (Fund), established in GS 58-31A-15, as enacted.

Enacts new Article 31A, State Insurance of Public Education Property, of GS Chapter 58, that provides the following. Sets forth defined terms, including defining public education board (board) to mean local boards of education, board of trustees of regional schools, and boards of trustees of community colleges. Places management and operation responsibilities of a system of insurance for public education property with the Commissioner. Authorizes the Commissioner to offer a system of insurance to any approved charter school. 

Requires flood insurance premiums for coverage of public education buildings to be paid by each board at rates fixed by the Commissioner. Allows the Commissioner to purchase insurance or reinsurance as necessary from admitted insurers to protect the Fund.

Authorizes and directs the Commissioner to establish a division to manage and operate the system, adopt necessary rules for implementation, and employ necessary staff.

Establishes the Fund to provide a reserve against property loss of boards. Deems the State Treasurer the custodian of the Fund, with responsibilities to the Fund as provided. Details procedures for the adjustment of premiums relating to the sufficiency of funds in the Fund to maintain the Fund at 5% of the total insurance in force. Establishes that all boards must pay five annual premiums on a building or property insured unless the building or property ceases to be insurable under the Article within the five-year period. 

Allows all boards to insure all public education property titled to that board against the direct loss or damage by insurable hazards in public education buildings and other public education properties in the Fund. Details requirements and procedures of election, including 90 days' notice of election prior to the insurance becoming effective, as specified. Requires the Commissioner to provide for periodic inspections of all properties insured under the provisions, as specified.

Sets forth parameters for the Commissioner to fix and adjust premium rates, with notification to boards of premium amounts required and amounts to be provided in the annual budget of the board. Requires the Commissioner to at least annually provide each board with a certificate showing the amount of insurance carried on each item of insurable property. Specifies that the insurance remains in effect until the board requests cancellation or the property becomes uninsurable. Requires premium payments within 30 days of the premium notice, with a 6% interest rate for delayed payments. 

Details parameters for payment of loss or damage by the Fund, a procedure for when disagreement arises between the Commissioner and the board as to the extent of loss or damage, and the procedure for disbursement of Funds.

Authorizes the Commissioner to use up to 10% of annual premiums to maintain an inspection and engineering service to reduce fire hazards in public education buildings insured in the Fund. Authorizes the Commissioner to cancel any insurance on any public education property when he or she determines the property is no longer insurable because of dilapidation and depreciation of the property, requiring 30 days' notice to a board prior to cancellation. Provides an avenue for a board to demonstrate the property can be restored to insurable condition. 

Directs the Commissioner to adopt rules providing for property insurance on property insured by the Fund against all risks of direct physical loss not otherwise insured against under the Article (as the Article's definition of insurable hazards includes an exclusive list of perils). Requires losses covered by the additional insurance to be paid out of the Fund in the same manner as fire and extended coverage losses. Requires the premiums to be paid as fixed by the Commissioner. Subjects the additional insurance to provisions and stipulations on policy forms approved by the Commissioner.

Repeals Article 38 of GS Chapter 115C, State Insurance of Public School Property. Makes conforming changes to GS 115C-12 and GS 147-69.2. Makes conforming repeal of Section 6.(d)(30) of SL 2018-32.

Section 4

Effective July 1, 2020.

Makes conforming changes to the act's titles.