Risk Management

Insurance FAQs

Topics:

General

Where can I find information on the general insurance requirements for contracting with the State of California?

Section 7.40 of the State Contracting Manual (SCM) contains information regarding the insurance requirements in state contracts. The Office of Legal Services maintains the SCM and other information regarding state contracting requirements. The best place to start at CSUN is to contact Procurement for information.

What does an AM Best A: VII rating mean in the insurance requirements?

The AM Best rating organization rates domestic insurance companies on their ability to back their insurance policies with fair and prompt claim payment. The letter rating is a measure of management's experience and stability. The Roman numeral is a rating of the company's financial size and strength of reserves and surplus capital. The letter rating ranges from A++ (Superior) to F (in liquidation) and the Roman numeral rating goes from VII ($50 to $100 Million) to XV (Greater than $2 Billion). The A:VII means excellent strength with over $50 million reported capital to pay claims.

Why do we need an indemnity clause in the contract when we already require an "Additional Insured" endorsement to the liability insurance policy?

Insurance is only one way that the contracting party (contractor) can indemnify the University, and if you have an indemnity provision in your contact with the contractor, that contractor is obligated to indemnify the University whether their insurance covers the loss or not. This puts the onus on the contractor rather than the University to make certain that their coverage is sufficient and current. Make sure your indemnity language is strong, so that if the contractor does not carry sufficient or correct insurance to cover their obligations to your entity, they will have to use their assets to indemnify those uninsured or underinsured exposures.

Is an agreement still required if someone is providing a service for "no fee?"

This "no fee" service may be a guest speaker that volunteers his/her time for free. This speaker is most likely an individual and our required limits of insurance may be excessive. In these cases the risk should be transferred by the use of a Guest Lecturer or Independent Contractor waiver form. The best place to start for those who want to provide service to the University is to contact Procurement who also offers assistance to small businesses.

Some "no fee" service may be provided by an independent contractor who is volunteering his/her service to the University. Depending on the scope of the service to be provided, you may choose to transfer the risk by the use of an Independent Contractor waiver. In most cases, where you are being offered professional services for no fee, a written agreement that outlines the responsibilities of each party is recommended. These written agreements in conjunction with the independent contractor waiver help to transfer the risk by agreement and also provide an opportunity to clearly outline the responsibilities of each party and the scope of the service provided.

It is important to understand that just because a service is free, the risks associated with the service are no less severe. Everything must be done to insure that the risks are mitigated. This may include hands on supervision of the activity to ensure that the environment is controlled.

Do University employees automatically have liability insurance coverage for rental cars used on University business?

University (State) employees have vehicle liability coverage for rental cars when they use one of the State-approved and contracted rental car agencies. The designated car rental agencies provide vehicle liability coverage ONLY when a State employee uses an American Express (State) Government card, or any State pre-approved direct billing procedure. If an employee uses any method of payment outside of these, vehicle liability coverage under the State contract does not apply. For specific information on Rental Cars check the Office of Risk and Insurance Management website.

Insurance for Purchase

What insurance can be purchased through the campus Risk Management Department?

The University Risk Management Department can help the University community purchase the following insurance policies:

  • Inland Marine Insurance for such property as Fine Arts, special computer equipment or scientific equipment, musical instruments or cameras.
  • Foreign Travel Insurance for students, faculty and staff traveling to other countries.
  • Special Events Insurance for activities that take place on or off campus.
  • Vendors & Contractors Insurance to meet the CSU insurance requirements for those smaller firms who want to do business with the University.
  • Participants Accident Insurance can be purchased by coaches and activity supervisors for injury coverage.

Technical Letter RM 2012-01

What is Technical Letter RM 2012-01, and why is it important?

Technical Letter RM 2012-01 assigns responsibility to the campus President to implement insurance requirements for agreements, contracts and purchases consistent with the California State University Insurance Requirements.

Through the practice of good risk management, the University attempts to transfer the risk of accidental loss through contracts and agreements. The transfer of risk is achieved by requiring suppliers, contractors, tenants, service providers and users of public facilities to protect themselves and the campus against claims or judgments arising from their products, services, activities or use of the campus. One of the most secure ways to assure that this transfer actually takes place is to require insurance.

Why are there insurance requirements in the basic contract?

Besides being required by RM 2012-01, insurance requirements assure the University that funds are available in the event of a claim against the contractor.

When must we require insurance as set forth in RM 2012-01?

The minimum insurance limits and hold harmless provisions as specified in RM 2012-01 are required to be in place for all suppliers, contractors, vendors, tenants, service providers and users of public facilities before the start of work, operations or activities. Any deviations require a risk management assessment of options.

RM 2012-01 calls for a risk management risk identification and evaluation process. What does that mean?

After consideration of the risk factors, the campus Risk Manager may amend the standard practices described in RM 2012-01 to either raise or lower insurance limits.

Questions that should be considered in determining what risks and subsequent losses could arise from the activities contemplated under the contract or agreement are:

  • What activities will take place?
  • Who could be harmed?
  • What property could be damaged and how severely?
  • What is the maximum likely loss for each activity?
  • Is there a possible pollution exposure?
  • Are crowds or bystanders/passersby likely to be involved?
  • Will inherently dangerous activities be involved?
  • How likely is it that the University will be a defendant in the event of a loss?

What insurance requirements for student placements does RM 2012-01 stipulate?

These agreements (contracts) typically provide for students to be placed with other agencies or institutions for course-required work experience. Student placement agreements must be in writing and shall specify minimum insurance requirements applicable to the contracting parties and appropriate indemnification and hold harmless provisions based upon the needs of the contracting parties.

Workers’ Compensation

What is the proper procedure for an employee reporting a work injury covered by Workers' Compensation Insurance?

The employee shall report all accidents/injuries promptly to his/her supervisor, but no later than 24 hours after the injury becomes known explaining to the supervisor how the injury occurred. The supervisor will give the employee the forms to complete and conduct an accident investigation. Coverage by Workers' Compensation Insurance will be determined by the circumstances of the accident/injury.

What happens after I file the Workers' Compensation (DWC Form 1) claim form?

Your employer must fill out and sign the employer's portion of the claim form and give the completed form to the claims administrator. This person handles claims for the University and will contact you. You will get a copy of the completed form within one working day after you filed it. Keep this copy. The claims administrator usually must decide within 90 days whether to accept or deny your claim.

Can an Independent Contractor be exempt from our Workers' Compensation insurance requirements?

Yes. Signing the "Independent Contractor's Liability Waiver and Hold Harmless Agreement" is usually sufficient. The best place to start at CSUN is to contact the Purchasing and Contracts Administration for information.

Are there any documents student interns should complete to obtain Workers' Compensation and General Liability insurance coverage?

Students do not have to complete any insurance documents to participate in an internship program. However, the University does not indemnify the internship site if the student's actions cause a loss at the site.

Since the status of recognized student in internship programs is dictated by the contractual agreement with the internship site, Workers' Compensation insurance may or may not be provided by the internship site. However, the CSU's "System-wide Student Professional Liability Insurance Program" (SPLIP) currently provides liability coverage for students enrolled in Nursing, Allied Health or Educational curricula to meet the host institutions insurance requirements.

Likewise, the CSU's "Student Academic Field Experience for Credit Liability Insurance Program" (SAFECLIP) covers students performing community service or volunteer work for academic credit. Students in "Work Study" programs are covered for Workers' Compensation through the organization they work for.

The Students Professional Liability Insurance and the Student Academic Field Experience for Credit Liability Program are not intended to replace any professional liability (malpractice) insurance the individual student may carry for activities outside of the clinical/educational experience situation. The decision to secure individual professional liability insurance is made by each student to meet individual needs. Various insurance companies provide policies with differing terms, conditions and limits. The need for separate individual PL insurance is also ifferent for each student and those choices should be made with the advice of licensed insurance broker or attorney.

For students who participate in programs requiring fieldwork experience and processed through the "Center for Community Service-Learning and Volunteer Program," the insurance requirements will be addressed in the "Internship/Service-Learning Agreement" with the Community Partner. An agreement must be in place for insurance coverage to be in effect.

Traveling

Does the State Motor Vehicle Liability Self-Insurance Program cover work-related travel to Mexico?

No. State employees who travel to Mexico on state business must secure Mexican Auto insurance. ORIM can procure either annual or short-term Mexican Auto Insurance for state employees who are required to drive in Mexico. Please contact ORIM for further information.

I'm traveling out of the country to a conference that's being paid by my department. Is Foreign Travel Liability Insurance mandatory or optional?

Purchasing Foreign Travel Liability Insurance (FTLIP) for individual travel to a foreign country is a decision made at the Department Chair level. Some departments may require it for non-USA travel. The risk management department strongly recommends the purchase of foreign travel liability insurance. The foreign travel liability insurance is intended to protect the traveler and the Department from claims below the University's self insured retention limit.

This program was designed specifically for employee and student international travel. It contains all the coverage with high limits that meet all university requirements. The insurance protection provided by the FTLIP is comprehensive and includes many additional services and features. You may be able to purchase travel insurance through travel agencies and others but that is personal liability insurance and does not protect the department/university against claims which may be filed as a result of your travel.