Comprehensive Property Protection Plan
Fire and All Other Perils Program
Policy Guide
A. COVERAGE SUMMARY
The Fire and All Other Perils Program (“Fire and AOP”) of the Comprehensive Property Protection Plan (CPPP), subject to the terms, exclusions, limits and conditions of the commercial insurance policy, insures against risks of direct physical loss of or direct physical damage to The University of Texas System’s (“U.T. System”) property as described below for the period September 15, 2004 through September 15, 2005.
1.
Program Limits$500,000,000 Limit per Occurrence except as otherwise noted by the sublimits in Section A.8.
2.
Property Coverage (sublimits may apply – see Section A.8)Unless otherwise excluded, this program covers the following property while on the scheduled locations (see schedule of locations in the U.T. System building inventory database) and within 1,000 feet thereof:
• real property in which U.T. System has an insurable interest;
• personal property owned by U.T. System, including improvements and betterments in which U.T. System has an insurable interest;
• personal property of others that is in the care, custody or control of U.T. System and for which the University is liable in the event of loss or damage;
• business interruption: Gross Earnings per schedule of insured values; and • extra expense.
3.
Property Not Covered• personal property of employees (within the self-insured retention), except in cases where the employee’s property is used exclusively for the University’s mission and such coverage has been approved in writing by the Chief Business Officer or his or her designee;
• personal property of students or others unless it meets the criteria outlined above in Item 2.
• money, securities, precious and semiprecious metals and stones, jewelry, and furs;
• animals (except for research use), land or land values, air, lawns, standing timber, and growing or drying crops;
• water, except water which is normally contained within any type of tank, piping system or other process equipment;
• aircraft, watercraft, railroad rolling stock, satellites, spacecraft, launch vehicles and launch sites, motor vehicles, motor scooters, and other self-propelled machines that are licensed for use on public roads;
• property in the course of construction, including equipment, machinery, tools, materials or supplies intended for use in the construction of such property; but this exclusion does not apply to repairs or renovations of existing buildings at scheduled locations;
• underground mines, caverns, and any property contained therein except for tunnels and underground walkways;
• bridges, roadways, dams, dikes, walks, patios and other paved surfaces; • offshore property, except that structures and their contents extending from land
or shore, and floating docks permanently moored to docks, river banks or shore shall not be considered offshore;
• overhead transmission and distribution lines including wire, cables, poles, pylons, standards, towers or other supporting structures, but this exclusion shall not apply to such property which is located on the scheduled premises or within 1,000 feet thereof;
• property sold by U.T. System under conditional sale, trust agreement, installment plan or other deferred payment plan after delivery to others; and
• any book, manuscript or object of fine art valued in excess of $1,000,000.
4.
Additional Coverages (sublimits may apply – see Section A.8):• automatic coverage for all newly acquired or newly constructed locations, including contents, up to $50,000,000; any new locations, including contents, valued over $50,000,000 are required to be reported within 90 days to receive all risk coverage;
• miscellaneous unnamed locations;
• personal property of Universitywhile such property is situated at any exhibition, exposition, fair or trade show within the policy territory;
• property in the course of construction for which there is an insurable interest at a scheduled location;
• debris removal resulting from a covered peril;
• demolition and increased cost of construction as required by law or ordinance; • pollutant clean up and removal resulting from a covered loss;
• radioactive contamination;
• extra costs of temporary repair or damage to property and extra costs of expediting such repair or replacement;
• defense costs ;
• expenses incurred to temporarily protect and preserve property in case of actual or imminent physical loss or damage;
• fire department service charges; and • leasehold interests.
5.
Valuation• The basis of valuation for loss adjustment for buildings and contents repaired, rebuilt or replaced within two (2) years from the date of loss or damage will be the smaller of the following:
a. the cost to repair, rebuild or replace on the same site with new materials of like kind and quality, whichever is the smallest; or
b. the actual expenditure incurred in repairing, rebuilding or replacing on the same or another site, whichever is smallest.
• The basis of valuation for loss adjustment for buildings and contents not repaired, rebuilt or replaced within two (2) years from the date of loss or damage will be the actual cash value at the time and place of the loss.
• All fine arts, books and manuscripts will be valued subject to a specific schedule on file with the insurance company. If not scheduled, the limit will be $10,000 for
books or manuscripts and $100,000 for fine arts. Coverage shall not exceed the least of the following: the cost to replace such lost or damaged property, the cost to repair or restore such damaged property or the declared value for any article suffering loss or damage.
6.
Excluded From Coverage are Losses Resulting from:• named windstorms;
• earth movement in California;
• law or ordinance except as provided; • animals, vermin, insects;
• dampness, dryness of atmosphere, extremes or changes in temperature; • utility interruption;
• fraudulent or dishonest acts;
• nuclear reactions or radioactive contamination except as provided; • hostile or warlike action;
• insurrection, rebellion, revolution, civil war, etc.; and
• confiscation, nationalization, destruction or damage to property by order of the government.
7.
Additional Exclusions• indirect or remote loss or damage; • faulty workmanship or defect;
• unexplained or mysterious disappearance disclosed by audit or inventory; • smog, smoke, vapor, liquid or dust;
• wear and tear, deterioration, erosion, corrosion, mold, wet or dry rot; • settling, cracking, shrinkage, bulging or expansion;
• shrinkage, evaporation, leakage of contents, change in flavor, texture, finish, decay or other spoilage;
• docks, piers, wharves or other property when damaged by water or watercraft; • loss or damage to products caused by design errors, poor workmanship in the
development or testing of products;
• loss or damage to stock and materials while being processed or tested;
• loss or damage from error or omission in planning, enforcing building codes, and designing, construction, maintenance of property;
• explosion in or of steam boilers; gas turbines, etc.;
• rupture, bursting of any steam boilers, steam turbines, pressure vessels, etc.; • mechanical or machinery breakdown;
• electrical injury , except fire, caused by artificially generated currents; • loss or damage, or costs in connection to asbestos, dioxin, polychlorinated
biphenols; and
• seepage, pollution, or contamination.
8.
Sublimits (all sublimits are per occurrence unless otherwise noted)Coverage Sublimits
Earth Movement & Volcanic Action $50,000,000 occ/agg
Flood and Water Damage $50,000,000 occ/agg
Flood in 100 Year Plain $10,000,000 occ/agg
Miscellaneous Unnamed Locations $25,000,000
• Earth Movement & Volcanic Action $ 1,000,000 annual agg. • Flood & Water Damage excluding $ 1,000,000 annual agg.
100 year flood zones flood zones
• Flood & Water Damage in 100 year $ 500,000 annual agg. flood zones
Property in the Course of Construction $25,000,000 Building Ordinance including Demolition $25,000,000
& ICC & Increased Time to Rebuild
Pollutant Clean-Up and Removal $ 1,000,000 occ/agg
Debris Removal Max of $25,000,000 or 25% of Loss
Claims Preparation Expenses $500,000 (subject to max. 5% of
combined PD & TE loss)
Non-Certified Terrorism $200,000,000
(100% of primary $100m layer, 25% of $400m excess of $100m layer) Ingress/Egress (30 days limitation) $ 1,000,000
Interruption by Civil Authority $ 1,000,000
(1-mile radius limitation, 30 days limitation)
Extra Expense $25,000,000
Expediting Expenses $25,000,000
Spoilage/Consequential Damage $ 2,500,000
Contingent Business Interruption $25,000,000
(direct suppliers and direct buyers)
Service Interruption-Property Damage $25,000,000
Service Interruption-Time Element $25,000,000
Accounts Receivable $25,000,000
Valuable Papers and Records $25,000,000
EDP Equipment $25,000,000
(mechanical breakdown/electrical injury)
EDP Media $25,000,000
Fine Arts $10,000,000
(subject to $100,000 maximum per item unless specifically scheduled)
Transit $20,000,000
Research animals (named perils only) $10,000,000
Plants, trees, and shrubs $ 2,500,000
Research and Development $ 5,000,000
Royalties $ 5,000,000
Exhibition, exposition, fair or trade show $ 500,000
Radioactive contamination $ 1,000,000
Defense costs $ 100,000
Protection of property $ 100,000
Fire Department service charges $ 100,000
Leasehold interests $ 1,000,000
Extended Period of Indemnity 180 days
Certified Terrorism $500,000,000 Max
(as defined by The Terrorism Risk Insurance Act)
A certified act of terrorism is an act certified by the Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General of the United States:
2. to be a violent act or an act that is dangerous to human life, property or infrastructure;
3. to have resulted in damage within the United States or outside of the US in the case of an air carrier or a US flag vessel, or the premise of a US mission; and 4. to have been committed by an individual or individuals acting on behalf of an
foreign person or foreign interest as part of an effort to coerce the civilian population of the US or to influence the policy or affect the conduct of the US Government by coercion.
But no act shall be certified by the Secretary as an act of terrorism if the act is committed as part of the course of a war declared by Congress (except for workers’ compensation) or property and casualty losses insurance losses resulting from the act, in the aggregate, do not exceed $5,000,000.)
9.
Component Deductible - $250,000 per occurrence• The deductible shown above applies to all covered losses under the Fire and AOP program.
• The deductible applies separately to each occurrence and to each component institution if multiple institutions are affected by a common occurrence.
10.
Commercial Insurance Policy Deductible• In each case of loss or damage covered by this program, the Insurer shall not be liable unless U.T. System sustains loss or damage to covered property in a single occurrence greater than $7,500,000 with an annual aggregate of $25,000,000subject to a $1,000,000 maintenance deductible.
• Unless otherwise specified in the commercial insurance policy, the commercial insurance policy deductible shall apply against the total loss or damage covered by this policy at all locations in a single occurrence.
• Any loss under $1,000,000 will not erode the aggregate.
11.
Other Insurance• The Fire and AOP program shall not provide coverage to the extent of any other insurance covering the same property against the same perils, and the program shall only be liable for the excess amount beyond the amount due from such other insurance and subject otherwise to all the terms and conditions contained in the commercial insurance policy.
B. GENERAL CONDITIONS
1.
Fire and AOP Premium and Fund Contribution Allocations• Component institutions will pay the commercial insurance premium annually, and the premium will be distributed based upon the total insured values reported annually to U.T. System’s Office of Risk Management (“Risk Management”). See the schedule of locations in the U.T. System building inventory database and reported income values for more information.
• Component institutions will contribute $2.5 million to the Fire and AOP self-insurance Fund on an annual basis, and the contribution amounts will be based upon the total insured values reported annually by each component institution. • Additional premiums may be due for facilities, contents and income values added
during the policy year in accordance with the terms and conditions of the commercial insurance policy.
• The annual fund contribution amount and the allocation will be evaluated annually by U.T. System Risk Management. The Executive Vice Chancellor for Business Affairs will have the authority to approve the ultimate amount and component allocation. An actuarial review of the CPPP will be performed periodically or at least every three (3) years.
2.
Reporting of Values• A representative from each component institution will be appointed by the Chief Business Officer to update the CPPP building inventory database and income values, and to notify U.T. System Risk Management with regard to property, content and income additions and deletions as needed or requested.
• Component institutions must report newly acquired or constructed property and other additions and deletions of property to U.T. System Risk Management as soon as possible following acquisition, substantial completion or sale of such property. U.T. System Office of Facilities Planning and Construction will copy U.T. System Risk Management on all substantial completion notices. U.T. System Risk Management will notify the appropriate contacts at the component institution that the notice has been received and request the new or revised value of the building and its contents. Newly acquired or constructed property valued in excess of $50 million (including contents) must be reported to U.T. System Risk Management immediately, in order to obtain more than $50 million of coverage for that facility and its contents.
3.
Engineering/Safety and Loss Prevention Services• A portion of the premium paid each year by component institutions will include a cost for safety and loss prevention services such as Plan Reviews and Loss Prevention Surveys of campus facilities. The survey information will include an evaluation of management programs, as well as construction, occupancy, protection and exposure information and will be used to update or complete exposure questionnaires. In the future, the information may be used as part of a premium allocation model.
4.
Claim Reporting• All losses resulting from physical damage to property, including any
consequential loss of income, valued over $25,000 must be reported to U.T. System Risk Management, as soon as practicable, using the First Report of Loss Form (see Exhibit 1).
• If a loss is expected to exceed $250,000, a component institution must report the loss to one of the parties listed below immediately, and follow up within seventy-two (72) hours with a First Report of Loss Form.
• U.T. System Risk Management will forward losses with estimated values in excess of $250,000 to a third party adjusting company for determination of coverage and handling. Any claim adjusting fees will be paid directly by the component institution with the loss, but the fees will be included in the total cost of the loss as submitted for reimbursement through the self-insurance fund. If a claim under the program is ultimately denied, all claim adjusting fees will be paid by the component institution with the loss without reimbursement from the self-insurance fund.
• Losses in excess of $1 million per occurrence, subject to the commercial
insurance policy, will be adjusted by the Fire and AOP insurance company at no additional expense to the institution.
• Contact information for claim reporting is given below (reaching one of the following individuals listed below is sufficient for immediate reporting):
Paul Pousson, ARM
Associate Director for Risk Management 512-499-4559 (office)
512-844-8087 (cell)
Stacy Youngdale, ARM Risk Finance Manager 512-499-4401 (office)
Brice L. Sumrall Hilb, Rogal & Hobbs 281-363-7607 (office) 800- 301-3003 (office) 281-543-4469 (cell)
John Green, Vericlaim 972-620-4229 (office)
214-415-2087 (cell)
• Vericlaim 24-Hour Claim Reporting Hotline 800-304-3391
5.
Loss Payment• In the event of loss resulting from physical damage covered by the Fire and AOP program that exceeds the component institution’s $250,000 deductible, the Fire and AOP program will pay the agreed upon loss amount, in accordance with the terms and conditions of the commercial insurance policy except as noted for personal property of employees. The program will not be liable for more than the least of the following, less the applicable component institution deductible:
a. the actual amount of loss, as determined under the provisions of the commercial insurance policy;
b. the amount of any sublimit(s) applicable to such loss; or c. the policy limit.
•
The Fire and AOP self-insurance fund will not be obligated to make any payment until the component institution has sustained and paid the full amount of its deductible in respect of such occurrence and will not be obligated to cover losses in excess of $7.25 million per occurrence.• Funds will be transferred from the Fire and AOP self-insurance fund to the affected component institution for covered losses resulting from physical damage within 30 days after the Chief Business Officer of the affected component
institution and the Executive Vice Chancellor for Business Affairs have agreed to the amount of the loss. Settlements under the commercial insurance policy must be approved according to U.T. System’s Regents’ Rules and Regulations and will
be paid in accordance with the terms and conditions of the commercial insurance policy.
• If the insurance company agrees to advance payment to U.T. System for a loss, any funds advanced in excess of the proven and agreed upon loss amount will be retained in the Fire and AOP self-insurance fund account until proof of the loss attributable to the advance has been provided and agreed upon by all parties. Any interest income accrued on the retained funds will be used by U.T. System Risk Management to reduce future fund replenishments from all
institutions, including the institution that incurred the loss.
• If sufficient funds are not available in the self-insurance fund, U.T. System’s Office of Finance will determine the most advantageous and appropriate method for issuing debt in order to fund the loss.
6.
Fire and AOP Self-Insurance Fund Replenishment• Funds distributed from the self-insurance fund will be repaid over 5 years. • Fifty percent (50%) of the amount distributed will be re-paid by the component
institution with the loss. The remaining fifty percent (50%) will be paid by all
institutions in the same manner that the insurance premiums and fund contributions were allocated at the beginning of the program year in which the loss occurred. • If multiple component institutions are affected by a single loss, each component
institution will reimburse the fund for payments on covered losses in the same proportion as its insured loss to the total insured loss. The same methodology will apply if multiple losses, in excess of the $250,000 component institution deductible, occur in a single policy year.
• If debt is issued to fund a covered loss, thirty percent (30%) of the annual debt service payments will be paid by the component institution with the loss and seventy percent (70%) will be paid by the self-insurance fund.
• Sample loss scenarios are provided as follows: Example 1 - $34 million fire loss at UT San Antonio
Institution
Total Insured Values
Annual Fund Replenishment 5
Years
Annual Fund Replenishment
5 Years
Annual Debt Payment -
N/A
Annual Net Fund Payment -
N/A
Total Insurance
Payment
UT Arlington $776,058,097 $ 36,870
UT Austin $4,581,929,504 $ 217,684
UT Brownsville $52,505,310 $ 2,494
UT Dallas $301,357,805 $ 14,317
UT El Paso $454,741,452 $ 21,604
UT Pan American $342,269,436 $ 16,261
UT Permian Basin $117,700,130 $ 5,592
UT San Antonio $478,972,977 $ 725,000 $ 22,756
UT Tyler $120,651,180 $ 5,732
UT SWMC Dallas $1,526,438,504 $ 72,520
UT MB Galveston $2,046,966,402 $ 97,250
UT HSC Houston $923,777,212 $ 43,888
UT HSC SA $861,561,095 $ 40,932
UT MDACC $2,353,667,779 $ 111,821
UT HC Tyler $234,229,782 $ 11,128
UT System Admin. $87,332,069 $ 4,149
Example 2 – $7 mill. loss at UTA, $7 mill. loss at UTSWMC, $7 mill. loss at UT System Admin.
In s titu tio n
T o ta l In s u re d V a lu e s
A n n u a l F u n d R e p le n is h m e n t
5 Y e a rs
A n n u a l F u n d R e p le n is h m e n t
5 Y e a rs
A n n u a l D e b t P a ym e n t
(3 0 % o f $ 1 2 .7 5 m ill.
d e b t)
A n n u a l N e t F u n d P a ym e n t
(7 0 % o f $ 1 2 .7 5 m ill. d e b t)
T o ta l In s u ra n c e
P a ym e n t
U T A rlin g to n $ 7 7 6 ,0 5 8 ,0 9 7 $ 2 5 0 ,0 0 0 $ 3 8 ,1 4 1 $ 1 1 1 ,1 6 0 U T A u s tin $ 4 ,5 8 1 ,9 2 9 ,5 0 4 $ 2 2 5 ,1 9 1
U T B ro w n s v ille $ 5 2 ,5 0 5 ,3 1 0 $ 2 ,5 8 1 U T D a lla s $ 3 0 1 ,3 5 7 ,8 0 5 $ 1 4 ,8 1 1 U T E l P a s o $ 4 5 4 ,7 4 1 ,4 5 2 $ 2 2 ,3 4 9 U T P a n A m e ric a n $ 3 4 2 ,2 6 9 ,4 3 6 $ 1 6 ,8 2 2 U T P e rm ia n B a s in $ 1 1 7 ,7 0 0 ,1 3 0 $ 5 ,7 8 5 U T S a n A n to n io $ 4 7 8 ,9 7 2 ,9 7 7 $ 2 3 ,5 4 0 U T T y le r $ 1 2 0 ,6 5 1 ,1 8 0 $ 5 ,9 3 0
U T S W M C D a lla s $ 1 ,5 2 6 ,4 3 8 ,5 0 4 $ 2 5 0 ,0 0 0 $ 7 5 ,0 2 1 $ 1 1 1 ,1 6 0 U T M B G a lv e s to n $ 2 ,0 4 6 ,9 6 6 ,4 0 2 $ 1 0 0 ,6 0 3
U T H S C H o u s to n $ 9 2 3 ,7 7 7 ,2 1 2 $ 4 5 ,4 0 1 U T H S C S A $ 8 6 1 ,5 6 1 ,0 9 5 $ 4 2 ,3 4 4 U T M D A C C $ 2 ,3 5 3 ,6 6 7 ,7 7 9 $ 1 1 5 ,6 7 7 U T H C T y le r $ 2 3 4 ,2 2 9 ,7 8 2 $ 1 1 ,5 1 2
U T S y s te m A d m in . $ 8 7 ,3 3 2 ,0 6 9 $ 2 5 0 ,0 0 0 $ 4 ,2 9 2 $ 1 1 1 ,1 6 0
T O T A L S $ 1 5 ,2 6 0 ,1 5 8 ,7 3 4 $ 7 5 0 ,0 0 0 $ 7 5 0 ,0 0 0 $ 3 3 3 ,4 8 0 $ 7 7 8 ,1 2 2 $
-7.
Recoveries From Outside Entities• In the event of a covered loss involving potential recoveries from FEMA or a similar organization, the loss will be reported, handled and paid within the terms and conditions of the Fire and AOP program. The component institution that sustained the loss, with assistance from U.T. System Risk Management, will be responsible for coordinating the recovery claim. Any funds recovered from FEMA or a similar organization, that are attributable to losses paid from the Fire and AOP self-insurance fund, will be returned to the fund within 30 days of their receipt by the component institution.
• In the event of a covered loss that could be attributable to the negligence of another party, the loss will be reported, handled and paid within the terms and conditions of the Fire and AOP program. Funds later recovered from the other entity, that are attributable to losses paid from the Fire and AOP self-insurance fund, will be returned to the fund within 30 days of their receipt by the component institution.
8.
Dispute Resolution• If a component institution disagrees with any matter relating to the self insurance portion of the Fire and AOP program including, but not limited to:
a. calculations of premium and fund contributions; b. the occurrence of loss or damage;
c. coverage provisions as they apply to an event or claimed loss; or d. the value of the property or amount of loss;
such dispute shall be settled by the Executive Vice Chancellor for Business Affairs after discussions with the component institution’s Chief Business Officer.
This policy guide is for informational purposes only and is intended only to serve as an overview of the current University of Texas System CPPP Fire and AOP program. The actual coverage terms and conditions will be determined by the applicable language in the commercial insurance policy. A copy of the commercial insurance policy may be obtained by contacting U.T. System Office of Risk Management. Each claim must be individually reviewed to determine whether or not the Fire and AOP program applies and coverage is available.
The Fire and AOP program does not constitute a waiver of the University’s sovereign immunity nor a waiver of any other legal or factual defenses to which the University may be legally entitled.
This plan of self insurance does not constitute a contract; does not create any legal duties beyond those established by law; is subject to modification or cancellation at any time and; does not grant any rights beyond which any organization, group or person is already legally entitled.
