Insurance Requirements For Contracts

Definition:In order to protect the university's resources and minimize its exposure to inappropriate liability and workers' compensation claims, California State University San Marcos requires that all vendors with whom it contracts, assume as much liability as is reasonable for their activities and products, including those of their employees and subcontractors. The campus will establish insurance requirements based upon the level of potential risk exposure to the campus during performance of a contract. In all instances, the campus shall recommend transferring all possible liability for an activity that is not a routine part of its daily operations and/or is not primarily controlled and/or performed by campus employees. Periodically, the campus will review established guidelines, including the rules and regulations of The CSU and the State of California, to determine the appropriateness of its insurance requirements. The campus President has designated specific individuals to approve all campus purchases and contractual agreements. These individuals are: the Director of Procurement, Contracts & Materials Management, the Associate Vice President for Finance and Administrative Services, and the Vice President for Finance and Administrative Services. Accordingly, the ability to waive any insurance requirements for university contracts is restricted to these individuals.
Authority:California State University Executive Orders 849, 715 and 669; State University Administrative Manual
Scope:This policy and subsequent procedures applies to all areas of the campus community. It does not apply to minor and major capital projects, which are guided by existing State and CSU system terms and conditions.
Responsible Division:Finance & Administrative Services
Approval Date:02/28/2000
Implementation Date:02/28/2000
Originally Implemented:01/01/2000
Signature Page/PDF:View Signatures for Insurance Requirements For Contracts Policy


Procedure

I. BACKGROUND

A CSUSM task force was formed to identify the level of risk exposure to the campus by project type, determine high and low risk, and to establish when insurance will be required and what type(s) will be required. These projects were broken down into three (3) categories:

  • Guest Lecturers/Speakers/Performers/Independent Contractors.
  • High risk projects, including services.
  • Low risk projects, including services.

The task force did not consider minor or major capital projects, which are deferred to general contract conditions as required by the CSU and the State of California.

II. PURPOSE 

A) California State University San Marcos requires that all vendors with whom it contracts, assume as much liability as is reasonable for their activities and products, including those of their employees and subcontractors, in order to protect the university´s resources from liability and workers´ compensation claims. The only individuals who may waive these requirements are also designated by the campus President to approve all campus purchases and contractual agreements. Those individuals are: the Vice President for Finance and Administrative Services, Associate Vice President for Finance and Administrative Services, and the Director of Procurement, Contracts & Materials Management.

B) The following outlines the insurance requirements for specific types of contracts. These requirements are based upon the level of potential risk exposure to the campus during the performance of the contract. In all instances, the campus recommends transferring all possible liability for an activity that is not a routine part of its daily operations and/or is not mainly controlled and/or performed by campus employees.

III. INSURANCE REQUIREMENTS FOR CONTRACTS BY TYPE

A) Guest Lecturers / Speakers / Performers / Independent Contractors

  1. The Director of Procurement, Contracts & Materials Management will review all Guest Lecturer, Speaker /Performer, and Independent Contractor requests.
  2. When applicable, as determined by the Director of Procurement, Contracts & Materials Management and campus guidelines, the Speaker/Service/ Performance (SSP) Agreement and insurance requirements shall apply. In most instances, this requirement can be waived following review by the Director of Procurement, Contracts & Materials Management. A standard waiver of claim and indemnification statement may be substituted for the insurance requirements upon approval by the Director of Procurement, Contracts & Materials Management.
  3. Payments, regardless of dollar amount:
    a) Planned Event: The Director of Procurement, Contracts & Materials Management reviews the requests and documentation. If an invoice and proper insurance documentation or waiver is attached, it is then processed as a direct payment. If no invoice is attached, a Purchase Order is entered through the normal Banner process. An agreement is drawn, as appropriate.
    b) After the Fact: The Director of Procurement, Contracts & Materials Management reviews for the proper insurance documentation or waiver, and processes as direct payment. NOTE: All "after the fact" procurement actions are logged and reported to the Vice President for Finance and Administrative Services to apprise respective division vice presidents and/or the President of inappropriate activities that violate campus, system and state audit requirements. All "after the fact" procurement actions violate these requirements.

B) High Risk Projects, Including Services

  1. In order to limit the university´s liability, the minimum standard requirements are:
    a) Vehicle Liability: Not less than $1,000,000 for injuries, including accidental death to any one person, and subject to the same minimum for each person, in an amount not less than $1,000,000 for each accident, and property damage insurance in an amount of not less than $1,000,000.
    b) General Liability, Public Liability & Property Damage Insurance: Not less than $1,000,000 per occurrence, $2,000,000 aggregate and must include bodily injury, personal injury and property damage. Depending upon the event and/or services provided, higher coverages may be required by the campus.
    c) Workers' Compensation: The State of California standard is $1,000,000 each accident, $1,000,000 disease limit, and $1,000,000 each employee.A Sole Proprietor with no employees is exempt from workers' compensation. This is considered high risk. In such a case, the university requires proof of health insurance with coverage breakdown.
    d) An underwriter's endorsement to the policy that includes additional insured language as follows:
    "The State of California, the Trustees of the California State University, CSU San Marcos, and the officers, agents, employees and duly authorized volunteers of each are included as additional insureds."
    e) A completed and signed statement of indemnification and waiver of claim.
    f) Trades and licenses (as necessary) require verification of compliance with all licensing requirements and classification information as appropriate.
  2. Standard forms required:
    a) General Liability Insurance Certificate and an Endorsement
    b) Vehicle Insurance Certificate and EndorsemenT
    c) Workers' Compensation Insurance/Health Insurance verification
    d) Drug Free Workplace Certificate
    e) Vendor Data Form, Std. 204, if not on file
  3. Examples of high risk:
    • Boiler maintenance
    • Bus rental
    • Equipment rental - heavy equipment (fork lifts)
    • Janitorial
    • Landscape
    • Moving companies
    • Painting
    • Pest control
    • Roof repair
    • Tree trimming
    • Vehicle refueling (propane tanks)
    • Window replacement
    • Window washing

C) Low Risk Projects, Including Services

Based upon review of the event and/or services provided, the contractor may be required to provide verification of general liability, auto, and workers' compensation coverage in the amounts required by the campus, as determined by the Director of Procurement, Contracts & Materials Management and campus guidelines.

The Director of Procurement, Contracts & Materials Management, following campus guidelines, may determine that the activity, although normally considered low risk, has a greater degree of exposure to risk. In such cases, the high-risk criteria may be applied.

  1. Standard forms required for low risk projects/services are:
    a) Drug Free Workplace
    b) Vendor Data Form, Std. 204
    c) Vehicle Insurance Certificate and Endorsement, if applicable
  2. Examples of low risk services
    • Event set-up
    • Inspections (fire alarms, scientific equipment)
    • Pick-up and delivery of repaired item