Risk Management

Effective Date: 07/01/95

Introduction Statement 1: Introduction Statement


State Insurance Department

Insurance coverage for University buildings and contents is coordinated through the Risk Management Office, which procures insurance through N.C. Department of Insurance approved services. Settlement of claims, bonding, and procurement of insurance for University-owned vehicles are also handled by Risk Management through the N.C. Department of Insurance. The personal property of employees is not insured by the University.


State Property Fire Insurance Fund

In 1945, the North Carolina General Assembly created a self-insurance fund known as the State Property Fire Insurance Fund which is administered by the North Carolina Department of Insurance. The purpose of the fund is to insure State Property and to control the loss of that property and the lives of persons connected therewith.


Values of State-Owned Assets

During the 1985 session of the General Assembly, G.S. 58-191 was enacted to provide for insurance coverage under the State Property Fire Insurance Fund to be on a replacement cost basis instead of an actual cash value basis (replacement cost minus depreciation).


Fire and Lightning Coverage

Fire and lightning coverage for most academic and office buildings is provided to the University through the State Property Fire Insurance Fund at no cost unless the building was erected and/or is operated with "special operating funds" (funds derived from sources other than the general fund). Insurance premiums for departmental buildings in this category are paid through the appropriate departmental or University budget.

At a minimum, all University-owned buildings are protected against loss from fire and lightning up to the replacement value of the building. For rating and informational purposes, the Department of Insurance calculates the replacement value for a given building equal to the cost to construct a replacement building of equal quality, function and size. The Department of Insurance uses values for all state-owned buildings based on average costs for various North Carolina areas. A building loss settlement, however, depends on the actual cost of replacement, and not necessarily the value that has been calculated using the average cost.


Extended Coverage

Each University building and its contents valued at $1,100,000 and over is protected for extended coverage (EC) which includes protection against loss or damage by the perils of wind, hail, aircraft, riot, vehicle, explosion and smoke with $100,000 deductible per building. At the same time, buildings and contents valued at less than $1,100,000 are covered with extended coverage which includes the perils of wind and hail only. This coverage is also subject to a $100,000 deductible per building.

If extended coverage with a $500 deductible (including wind, hail, aircraft, riot, vehicle, explosion and smoke) is desired for any of these buildings, the department is required to pay a premium charge based on the total value of the building as established by the Department of Insurance.

Effective July 1, 1994, any building and contents sustaining damage from a named storm (i.e., hurricane) that does not have the bought down $500 deductible, is subject to a University-wide $2 million deductible per named storm incident.

Property insurance may further be endorsed to include, for example, coverage for vandalism, malicious mischief, sprinkler damage, theft, "all risk," and business interruption.


Deductibles

Effective July 1, 1987, the Department of Insurance requires a $500 deductible on all loss payments except theft losses, which have a deductible of $1,000 with the exception of the University-wide $2 million deductible per named storm.