The purpose of this paper is to explain the State Self-Funded Property Program (SSPP) as it relates to the University of Wisconsin, and the procedures campus risk managers should follow to receive the benefits of this coverage.
The State Self-Funded Property Program [Statute 20.865(1)(f)] provides coverage for loss of University-owned real and personal property, motor vehicle physical damage, business interruption (revenue loss that occurs as a result of property loss), extra expense (incurred after a property loss to maintain operations), and some bailments.
The SSPP is administered through the Bureau of State Risk Management (BSRM) in DOA through which all final coverage decisions and loss payments are made. The SSPP establishes a $5 million self-insured retention above which a $500 million excess policy is purchased. The conditions set forth in the excess policy form a guideline for describing what exposures and perils will be covered in the event of a loss.
A. Real and Personal Property Coverage
1. Covered Real Property
Real property includes buildings and related service fixtures and equipment. Coverage under the SSPP applies to real property that is owned, in which the campus has an insurable interest, or is under contractual obligation to insure. Included in the definition of real property are supplies, tools, machinery and permanent structures which service the buildings; tanks, flues, pipes, drains, wiring, underground tunnels and passages, fixtures, built-in appliances and permanently installed floor coverings.
2. Excluded Real Property
The policy excludes coverage for growing crops, trees, shrubs, lawns, land or land value, foundations, roads, sidewalks, pavements, pipes which contain wiring below ground, and floating docks.
3. Covered University Personal Property
Personal property (exclusive of motor vehicles) is essentially contents within a building which are not permanently erected or attached to the building. Coverage applies to personal property that is owned by the University in which the campus has an insurable interest (eg. equipment which it leases), and property belonging to others but which is in the custody of the campus (except when the campus is acting as a warehouser or bailee for hire). Additional covered property may include livestock feed, fine arts, fabricated equipment, improvements and betterments to non-owned buildings, and personal property of employees while it is on the campus and agreed to as outlined in #4 below.
4. Covered Individual Personal Property
It is possible for employees personal property to be covered under this category provided all of the following conditions are met:
a. Itemized listing of items and estimated value of each item is in the possession of the institution\’s risk manager;
b. Signed approval by the dean or assistant vice chancellor for business affairs is on record with the institution\’s risk manager;
c. Items benefit the mission of the university;
d. Values are reported to System Risk Management annually; and
e. Itemized listings are subject to audit.
5. Excluded Personal Property
Coverage is excluded for deeds, bills, manuscripts, securities, evidence of debt or title, jewelry, precious stones, precious metals, watches, silverware, fur, and computer software that can be duplicated. Coverage may be afforded for these items when they are reported in the campus annual property renewal value report.
6. Covered Causes of Loss
Coverage is afforded against all causes of direct physical loss except as listed below:
a. Explosion, rupture or bursting of pressure vessels or pipes, steam boilers, steam pipes, steam turbines, steam engines or flywheels. Resultant damage to other property is covered unless otherwise excluded.
b. Damage sustained to that part of the property which is actually being worked upon or caused by repairing, adjusting, servicing, or maintenance operations testing. Resulting damage to other property is covered unless otherwise excluded.
c. Delay, loss of market, gradual deterioration, inherent vice, insect, vermin, ordinary wear and tear.
d. Loss or damage caused by or resulting from contamination or pollution, unless resulting from fire, lightning, extended coverage perils, earthquake, falling objects, weight of snow, ice or sleet, collapse, water damage, leakage or accidental discharge from a sprinkler system.
e. Loss or damage caused by or resulting from settling, subsidence, cracking, shrinking, bulging, or expansion of pavement, foundations, walls, roofs, floors, and ceilings.
f. Expense resulting from government direction or request that a material that can no longer be used for its intended purpose be removed or modified.
g. Debris removal unless it is the result of a covered peril and at a covered location.
h. Nuclear incident and loss from hostile or warlike power.
i. Exposure to rain, sleet, snow, and wind driven sand or dust when a window/door has been left open.
j. Freezing of plumbing or heating systems or their appliances, or by leakage overflow from such systems or appliances while the building in which they are located is vacant or unoccupied, unless the campus has exercised due diligence in maintaining heat in the building, or unless such systems or appliances have been drained and the water supply shut off during the vacancy or un-occupancy.
k. Loss due to employee or officer dishonesty, any unexplained loss, mysterious disappearance, or shortage disclosed on taking inventory.
Territorial Restrictions: Coverage is worldwide with regard to personal property.
B. Inland Marine – Transportation Coverage
Property which is owned by the University is subject to loss while in transit. The State self-insures its owned and non-owned transit exposures. It also purchases a separate transit policy for shipments of high valued equipment greater than $100,000 when the University is responsible for its value during shipment of such property either over land, air, or water.
For UW-owned property, the value of all shipments (overseas and domestic) that are valued at $50,000 and greater are required to be reported to State Risk Management via the online form on a per shipment basis. When shipping cargo, agency staff should immediately notify their appropriate risk management contact who will request that they complete the form, “Report of Shipment and Request for Marine Cargo Coverage.” This should be done at least 72 hours prior to time of shipping. The information that is requested on the web-based form will be applicable to most situations but there may be specialized circumstances that require additional information, usually requiring additional time for purposes of obtaining greater levels of insurance coverage. Property shipped to a given location and subsequently returned would be considered two shipments and should be reported separately for each way. All domestic carry-on equipment/instruments with values of greater than $50,000 should also be reported. Additional shipping instructions can be found on pages 16-18 of the DOA Property & Liability Manual.
The party who will bear the risk of loss depends on the type of contract between the University and the vendor, property owner, or shipper. Most often, the risk of loss is transferred at the point where title to the goods is transferred. In the absence of contractual language that specifies who is responsible for the loss, the following risk of loss rules apply:
Shipping Point Contracts
The buyer bears risk of loss.
The seller bears risk of loss.
Sale on Approval
In a sale on approval situation, possession, but not title to the goods is transferred to the buyer for a trial period. In the absence of a contract, both title and risk of loss are on the seller until the goods are approved or accepted by the buyer. While the goods are in the potential buyer\’s possession or in transit either to the potential buyer or seller, risk of loss is on the seller. A situation involving sale on approval would include a department using a piece of equipment for a period of time with the option to purchase it if the department approves of it.
Sale or Return
In a sale or return situation, the goods are delivered to the buyer with an option for the buyer to return leftover goods to the seller. The risk of loss is on the buyer while the goods are in the buyer’s possession. When the buyer decides to return the remaining goods to the seller, risk of loss remains with the buyer until the goods reach the seller. An example of a sale or return situation is when the buyer possesses the goods in order to resell them (eg. garden seeds). At the end of a particular time period, the buyer returns to the seller the seeds which remain unsold.
Excluded Transit Exposures
Accounts, bills, jewelry, precious stones, currency, notes, securities, evidences of debt, animals, aircraft, watercraft, vehicles, loss resulting beyond the direct physical loss to the insured property, airborne shipments to and from Alaska, waterborne shipments via the Panama Canal, and property shipped by mail.
Covered Transit Cause of Loss
Covered property while in transit is insured against all risks of loss from any external causes except as listed below:
Leakage, breakage, marring, scratching, dampness or dryness of atmosphere, extremes or changes of temperature, shrinkage, evaporation, loss of weight, rust, contamination, change in flavor, color, texture or finish, unless such damage is caused directly by fire, lightning, windstorm, hail, explosion, riot, aircraft; vehicle or vessel other than the transporting conveyances, bursting of pipes or apparatus, vandalism, malicious mischief, theft and attempted theft.
C. Automobile Physical Damage Exposures
Physical damage coverage is available for all vehicles except those vehicles which are used to transport people or property for a fee.
1. Covered Auto Physical Damage Cause of Loss
Coverage applies for all risk of loss due to physical damage except as listed below: Wear and tear, freezing, mechanical breakdown or failure, loss to tires unless damaged by fire, vandalism, malicious mischief or theft.
2. Miscellaneous Provisions
a. Territorial Restriction
Coverage applies only to vehicles within the United States, its territories or possessions and Canada. Vehicles taken outside of the United States or Canada must purchase both liability and physical damage coverage before departure.
b. Rental Vehicles
Collision Damage Waivers should not be purchased when renting a vehicle while on State business in the United States or Canada. If the campus has physical damage coverage on comparable State-owned vehicles, then the rental car will be covered as if it were University-owned. Collision damage coverage is normally included in the rate charged by the State of Wisconsin contracted rental firms as part of the purchasing agreement.
c. Windshield Replacement
As of December 6, 2006, Safelite Fulfillment, Inc., is the State’s vendor for vehicle glass repair and replacement and should be used whenever possible. The state purchase order number, available from System Risk Management, must appear on all invoices. When glass is repaired or replaced by this establishment, no deductible will apply.
Appointments with Safelite, which has nationwide service locations, are made by calling 1-800-469-3941 day or night. Safelite will schedule the repair with their nearest and best location/technician available. In some cases, they may use a Safelite affiliate, which means that they may operate under a different name.
It is to be emphasized to your drivers and others who may be in a position to use these services that Safelite is ONLY to be used for the replacement or repair of auto glass. Wiper blade replacements and windshield wash solution, for example, are not covered.
If the State is responsible for damage to glass of a private vehicle, Safelite may be used if the claimant is agreeable. For example, if a state employee is mowing grass at a state-owned facility and a rock is thrown up that breaks the windshield of a vehicle not owned by the state we may be responsible. If it is determined a state employee is responsible for damages of this nature, the campus risk manager or other campus representative should contact Safelite to set up an appointment and provide the purchase order number for the vehicle in question. Do not give the purchase order number to the claimant.
If an emergency situation arises for glass replacement and Safelite cannot meet your needs, another vendor may be considered after you notify and gain approval from State Risk Management. Safelite has made a commitment to provide statewide mobile service on a same or next day basis. Justification and documentation must be provided if another glass company is used to meet an urgent need that cannot be met with Safelite.
Any difficulties in obtaining service under this contract should be documented and reported to System Risk Management or the Bureau of State Risk Management. Safelite also conducts its own customer satisfaction surveys 3 to 14 days after service and State Risk Management will be receiving copies of the surveys.
d. Towing Charges
Maximum miles to be reimbursed for covered towing (related to a covered loss) is no greater than 100 miles. If towing requires greater than 100 miles, immediate contact should be made with agency risk manager. Exceptions to the 100 mile limit may be considered under extenuating circumstances.
e. Storage Charges for State Autos
Maximum days to be reimbursed for covered storage (subsequent to a covered loss) for State Autos is five (5) days. If storage requires greater than five (5) days, immediate contact should be made with agency risk manager. Exceptions to the 5-day limit may be considered under extenuating circumstances.
D. Builder’s Risk Coverage
Builder’s risk coverage provides coverage for property in the course of construction. This coverage applies to new, free-standing structures, as well as existing buildings undergoing additions, improvements, remodeling, etc. These projects are all covered under the SSPP.
A. Verbal Notification
Claims < $1,000
No claim, does not exceed deductible.
Email to System Risk Management (SRM) within 7 days of the date of loss then follow written notification procedures noted below to submit claim. Please note that claims are expected to be concluded prior to the 120 day deadline so they must be received by SRM at least 7 days prior to the 120 day claim submission deadline to allow for review/processing of claim materials.
Notify SRM within 24 hours of of date of loss then follow up within 7 days with General Incident Report and conclude claim prior to 120 day claim submission deadline as per instructions above.
If a loss appears as if it will exceed $10,000 in damage, notify the Bureau of State Risk Management (BSRM) and SRM within 24 hours of date of loss. BSRM will, in turn, engage Cunningham Lindsey (CL). The use of CL on all Builders’ Risk claims and water damage claims over $10,000 is required by the State’s excess insurer.
Property loss to a DOA leased vehicle
Notify SRM and BSRM only if a liability claim is likely to result from the incident. Send property claim information to the DOA Fleet Manager.
Loss to a rental vehicle
File a claim as if it were an owned vehicle.
B. Written Notification
Gathering sufficient documentation of the loss is important in order for the claim to be settled in an expedient manner. The departments or individuals suffering a loss are often willing to supply information upon request. It is important for the campus risk manager to be aware of the information that is necessary for a claim to be filed.
The following are items that are to be submitted to System Risk Management in order for a property claim to be successfully filed:
gives an overall picture of how, when and where the loss occurred, provides business unit and fund of department effected by loss
gives a narrative describing what happened to cause the loss and initial cost estimate
itemizes charges being submitted for reimbursement
Estimates or Invoices
from vendors or contractors supporting labor and material numbers. Two estimates are required for damage greater than $2500
Internal Work Orders
supports campus labor and material figures
required only for theft, vandalism and collision
Original Purchase Invoices
required when opting to seek actual cash value as opposed to replacement value to substantiate age and value of property in order to depreciate it
Form DOA-6496 (Formerly AD-86 for vehicles only)
to evidence that damage was caused by lightning. The form is to be signed by the repair company or staff that has sufficient knowledge to make this determination
Other Useful Info
memos from departments detailing how the loss occurred, photographs, other supporting documents
Deductibles are applied per occurrence and the institution sustaining a loss will be responsible for a deductible per loss occurrence as follows:
Claims closed within 120 days from date of loss. Requests for extension must be received at least 20 days prior to the 120-day deadline.
Deductible: $1,000 ($2,500 for theft with no evidence of forced entry/removal)
Claims closed between 121 days – 180 days from date of loss
Deductible: $2,500 ($5,000 for theft with no evidence of forced entry/removal) if no extension of time has been granted.
Claims closed 181+ days from date of loss
Deductible: $5,000 ($10,000 for theft with no evidence of forced entry/removal) if no extension of time has been granted.
Examples of forced entry or removal include visible pry marks or broken glass. No deductible applies to vehicle glass breakage when using the State’s vendor (see above).
D. Property Valuation
Contents are covered for replacement cost or the cost to repair, whichever is less. Vehicles and farm machinery are insured for their actual cash value (bluebook price).
E. Transit Losses
1. Institution receives damaged goods from a carrier:
a. Do not sign delivery receipt until shipment has been inspected for damage to the carton. Note any shortage or damage on the receipt and have driver sign it.
b. If it appears that the contents may be damaged too, open the carton with the driver still present, note damage on the receipt and have the driver sign it.
c. In any event, open all cartons as soon as possible after delivery and inspect for concealed damage. This must be done at the delivery location.
d. If concealed damage is discovered, notify the purchasing department upon discovery. Do not remove package from receiving area. The items must remain there until a claim is settled (which could take several months). The institution must retain the damaged container.
e. If the transportation is provided and insured by the US Postal Service, the department should settle the claim directly with the Post Office.
2. Institution has sent items to another party, and the items have been damaged or lost in transit:
a. If the institution was responsible for insuring the item in transit, attempts should be made to recover from the carrier through immediate correspondence.
b. If the institution receives no or partial recovery, a property claim for the remaining loss should be filed with State Risk Management (SRM). Include a copy of the transportation log page where item appears.