Download Contractual Insurance Requirements and Certificates of Insurance

The University of Texas
System
Certificate Review for Contract
Insurance Requirements
CERTIFICATE REVIEW FOR CONTRACT INSURANCE REQUIRMENTS
A Certificate of Insurance is a document that evidences for one party the insurance coverage(s) held by
another party. It is not an insurance policy and it does not provide any coverage to the certificate holder.
Moreover, all certificates contain the following disclaimer on the reverse side:
The Certificate of Insurance on the reverse side of this form does not constitute a contract between the
issuing insurer(s), authorized representative or producer, and the certificate holder, nor does it
affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon.
Contractual Insurance Requirements and Certificates of Insurance
Insurance requirements are present in most contractual agreements. The Office of Risk Management
(ORM) can help you determine the limits to require for certain exposures based on the level of risk.
Certificates from Other Parties
When other parties provide the University with a certificate of insurance, you need to verify that all
insurance requirements have been met. This needs to be done on a line by line basis. What is the
contractual requirement, versus what is represented on the certificate of insurance? ORM can assist you
with this task. It is always preferred that ORM review contracts prior to them being signed to verify that
the correct insurance specifications are being asked for and the correct limits are being required.
Acord Certificate Quick Tips (Please view example Quick Tips below)
The following are the parts of a certificate of insurance:
1. Producer – Produces or orders Certificates for the insured; answers questions, revises certificate
to meet the contract requirements.
2. Name of Insured – Must be the legal name of contracting party.
3. Types of Insurance – Must include types required by contract
4. Policy Form – Will indicate claims-made or occurrence form; see “8 Policy Expiration Date” for
additional information.
5. Named additional Insured – The certificate must state, either under Description of Operations or
by attached endorsement, that the Board of Regents of the University of Texas System and any
participating institution are additionally insured. On the certificate disclaimer there is the following
language – If the certificate holder is an Additional Insured, the policy(ies) must be endorsed. A
statement on this certificate does not confer rights to the certificate holder in lieu of such
endorsement(s).
6. Certificate Holder: Must be the Board of Regents of the University of Texas System; address
must include institution, department, contact person.
7. Policy Effective Date – Must be prior to or coincidental with effective date of contract.
8. Policy Expiration Date – for “occurrence” form coverage, date should be on or after the
termination date of contract; if “claims-made coverage”, coverage must survive for a period not
less than three years following the termination of contract and shall provide for a retroactive date
of placement proper to or coinciding with the effective date of contract.
9. Limits of Insurance – Must be same or greater than required by contract.
The University of Texas System · Office of Risk Management
Certificate Review for Contract Insurance Requirements
Last Updated March 2, 2009
1
10. Description of Operations – Review information in this section to determine it is consistent with
contract.
11. Notice of Cancellation – This language must be modified to read: “Should any of the above
described policies be cancelled before the expiration date thereof, the issuing company will mail
30 days notice to the certificate holder named to the left.”
12. Authorized Representative – Must be signed by an authorized representative of Producer.
13. The companies who are affording coverage – ORM can assist you in determining if the
carriers used meet our financial size and strength rating criteria. We require using insurance
carriers with a minimum A.M. Best Rating of A-: VII.
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o
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Coverage - the coverage section of the certificate includes liability or property insurance
depending on the type of coverage required and provided.
Coverage Section disclaimer – The policies of insurance listed below have been issued
to the insured named above for the policy period indicated. Notwithstanding any
requirement, term or condition of any contract or other document with respect to which
this certificate many be issued or may pertain, the insurance afforded by the policies
described herein is subject to all the terms, exclusions and conditions of such policies.
Aggregate limits shown may have been reduced by paid claims.
The coverage section includes the following areas:
o Type of insurance, policy number, policy effective date, policy expiration date and
limits.
o Under the Certificate of Liability the following are the types of insurance offered:
I.
Commercial General Liability written on a claims made or
occurrence basis
II.
General aggregate limit that applies on a policy, project or
location basis
III.
Automobile Liability written on a combined single limit basis
(each accident) or split limit basis (Bodily injury – per person,
Bodily injury – per accident and Property Damage – per
accident) for any auto, all owned autos, scheduled autos, hired
autos, and non-hired autos.
IV.
Garage Liability
V.
Excess/Umbrella Liability written on a claims made or
occurrence basis with an each occurrence limit and aggregate
limit. There is normally a deductible or retention when the loss is
not following form. If the loss is following form normally a
deductible/retention does not apply.
VI.
Workers Compensation and Employers’ Liability are written in
separate parts of the workers compensation policy. Workers
Compensation is written with statutory benefits of the state the
policy holder is domiciled in. Employers’ liability is written at
different limits. A waiver of subrogation is typically required by
the Board of Regents of the University of Texas System. All
certificates have a disclaimer page on the reverse side of the
certificate page. It states that if subrogation is waived, subject to
the terms and conditions of the policy, certain policies may
require and endorsement. A statement on this certificate does
not confer rights to the certificate holder in lieu of such
endorsement(s).
VII.
An “other” row is made available for coverage that are not
normal coverage types for liability or when different policy types
are trying to be consolidated onto the same certificate. Could
include professional liability or property policies.
The University of Texas System · Office of Risk Management
Certificate Review for Contract Insurance Requirements
Last Updated March 2, 2009
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U.T. System requires at least the following limits for the exposures outlined below.
These limits should be placed with a company licensed to do business in the state of
Texas with an A.M. Best Rating of A-,VII or better.
Property Insurance – First party insurance that indemnifies the owner or user of property for its
loss, or the loss of income-producing ability, when the loss or damage is caused by a covered
peril, such as fire or explosion. This insurance can cover contents (personal property) as well. 1
Appropriate wording for the property insurance requirement follows:
Please contact ORM for help with this provision (depends on the contract being signed).
General Liability – Insurance protecting commercial entities from most liability exposures other
than automobile and professional liability.2
Appropriate wording for the general liability insurance requirement follows:
Commercial General Liability Insurance with limits of not less than:
Each Occurrence Limit
Damage to Rented Premises
Medical Expenses (any one person)
Personal & Advertising Injury
General Aggregate
Products - Completed Operations Aggregate
$1,000,000
$ 100,000
$ 10,000
$1,000,000
$2,000,000
$2,000,000
The Board of Regents of the University of Texas System and the contracting institution
must be named as additional insured. The policy must be endorsed to reflect the
additional insured status.
Business auto coverage form – Insurance that protects the insured against financial loss
because of legal liability for automobile related injuries to others or damage to their property by
an auto.3
Appropriate wording for the auto liability insurance requirement follows:
Business auto coverage form covering all owned, non-owned or hired automobiles, with
coverage for at least $1,000,000 each accident limit Bodily Injury and Property Damage.
The Board of Regents of the University of Texas System and the contracting institution
must be named as additional insured. The policy must be endorsed to reflect the
additional insured status.
1
Glossary of Insurance and Risk Management Terms, Eleventh Edition, International Risk Management Institute,
Inc.; 2007.
2
Glossary of Insurance and Risk Management Terms, Eleventh Edition, International Risk Management Institute,
Inc.; 2007.
3
Glossary of Insurance and Risk Management Terms, Eleventh Edition, International Risk Management Institute,
Inc.; 2007.
The University of Texas System · Office of Risk Management
Certificate Review for Contract Insurance Requirements
Last Updated March 2, 2009
3
Workers Compensation and Employers liability – An insurance policy that provides
coverage for an employer’s two key exposures arising out of injuries sustained by employees.
Part One of the policy covers the employer’s statutory liabilities under workers compensation
laws, and Part Two of the policy covers liability arising out of employees’ work-related injuries
that do not fall under the workers compensation statute. Employers’ liability coverage pays on
behalf of the insured (employer) all sums that the insured shall become legally obligated to pay
as damages because of bodily injury by accident or disease sustained by any employee of the
insured arising out and in the course of his employment by the insured.4
Appropriate wording for the workers compensation requirement follows:
Workers Compensation Insurance with statutory limits and Employers Liability Insurance
with limits of not less than $1,000,000:
Employers Liability - Each Accident
Employers Liability - Each Employee
Employers Liability - Policy Limit
$1,000,000
$1,000,000
$1,000,000
Policies must include (a) Other States Endorsement to include TEXAS if business is
domiciled outside the State of Texas, and (b) a waiver of all rights of subrogation and
other rights in favor of University must be endorsed onto the workers compensation
policy.
For additional Certificate Review for Insurance Requirements information specific to UT System,
please contact the ORM Risk & Insurance Analyst.
4
Glossary of Insurance and Risk Management Terms, Eleventh Edition, International Risk Management Institute,
Inc.; 2007.
The University of Texas System · Office of Risk Management
Certificate Review for Contract Insurance Requirements
Last Updated March 2, 2009
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The University of Texas System · Office of Risk Management
Certificate Review for Contract Insurance Requirements
Last Updated March 2, 2009
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