Liability Programs

 

UKGC Self-Funded Liability Program

Contractual Liability Program

 

Subject: UKGC Self-Funded Liability Program

  • Purpose:

      • The purpose of this paper is to explain the UKGC Self-Funded Liability Program (UKGCSLP) as it relates to the Client, and the procedures Client's risk managers should follow to receive the benefits of this coverage.

  • Background:

      • A liability exposure arises out of the fact that one party (for example the Client or one of its employees) can be held legally and financially responsible for the injury of another person or their property. The Client, in the course of its operations, has certain rights and duties, which are prescribed by law. For example, the Client has the right to invite the public onto its premises and likewise has the duty to maintain the premises in a reasonably safe condition. Failure to perform a duty to an acceptable level may result in injury. If the injury is caused directly by the failure to meet a duty, then an employee, officer, or agent of the Client is negligent and may be responsible for the injury. This responsibility or liability may be imposed upon the Board of Directors and the Client's Legal Entity through the general rule of agency.

  • Defenses to Liability:

      • There are a number of defenses against liability which may be used by the risk manager in decreasing the Client's level of responsibility.

        1. The defense of comparative negligence can be used when the injured party is partially at fault for the injury or damage. For example, quite often Client's vehicles damage other vehicles due to improper backing. However, if the damaged vehicle was illegally parked, the Client may argue that comparative negligence exists and that only partial damages will be paid.

        2. The assumption of risk defense may be used when a person has knowledge or awareness of risk and was voluntarily exposed to the danger. For example, a spectator at a hockey game assumes some risk when sitting directly behind the goal. The Client may be partially negligent for improper guarding but may not have to pay full damages to a person injured by a puck.

        3. An exculpatory contract is an agreement which releases the Client from any liability arising out of it's negligence and may be used as a strong defense if negligence exists. Court interpretation of such an agreement may, however, result in some responsibility being placed on the Client.

        4. A final source of defense for the Client is the Statute of Limitations which states that liability claims must be made within 120 days for vehicle and general liability claims and 180 days for malpractice. If the injured party fails to give notice within that time, the Client's level of responsibility may be decreased.

      Despite these defenses, there still are a number of situations where the Client will be held fully responsible for injury to people or damage to property resulting from the negligent actions of employees, agents or officers of the Client.

  • Policy-Coverage Definition:

      • The Client is currently protected for liability arising out of the negligent actions of its employees, agents and officers through the UKGCSLP. This program is administered by the Department of Administration of UKGC.

      In order for coverage to exist, negligence must be proven on the part of a Client's agent, employee, or officer. Negligence can be determined through a four step analysis of the situation in which the injury occurred. The Client's risk manager should evaluate each liability claim based on these four requirements:

        1. A duty of some type is owed by the Client to the third party in the particular situation where injury occurred. For example, the Client has the duty to drive safely when using vehicles on public roads.

        2. The Clients employee, agent, or officer fails to fulfill the duty that is owed, for example, fails to drive safely.

        3. An injury or damage to a third party occurs.

        4. The injury or damage, which occurred was a proximate result of the Client's failure to meet its duty.

      Based on these criteria, the Client's risk manager can more clearly determine when negligence has occurred and when claim payment should be considered. Payment should also be dependent upon the fact that a Client's employee, agent, or officer was responsible for the negligence and that the individual was acting within the scope of his/her duties at the time of the incident.

      The Client does not provide liability protection for its employees, agents, or officers while they are acting outside of the scope of their employment duties. (Refer to Agent Liability for more detail on this topic.)

  • Procedures-Claims Handling

      • 1. General

        1. Any incident resulting in injury or damage to a third party (a non-Client employee) or their property should be reported to the Client's risk manager. This includes but is not limited to bodily injuries which occur on Client's property or during Client's events to Staff or guests of the Client; damage incurred to non-Client property which is on or off office as a result of Client's activities; or any other damages which may potentially be construed as the responsibility of the Client.

        2. It is the responsibility of the Client's risk manager to inform Client's personnel of proper reporting procedures for the Client's office. According to UKGC Regulations, the claimant has exactly 120 days from the date of the incident to file a legal claim with the UKGC's office. It is in the best interest of the Client's risk manager to be aware of the incidents that are occurring and to assist the claimant in resolving the matter. In addition, the Client's risk manager should retain a complete file copy of all claim and incident documentation for backup.

        3. Assuming that the Client's risk manager is the central incident reporting point for the Client's Staff, receipt of an incident report from Client's personnel or from a third party claimant should be handled consistently.

      2. Reporting a Claim by Telephone

        Immediate notification should be given to both UKGC Risk Management and Client's Risk Management by telephone in the event of any of the following. Notice should include description of incident, name of claimant and details of action being taken.

          1. Any medical emergency incidents including malpractice incidents.

          2. Any motor vehicle incidents where bodily injury has occurred or where injury could develop, particularly in a situation where rear-ending has occurred.

          3. Any general liability incident where bodily injury requiring medical attention occurs.

          4. Any claim where damage to the other vehicle may be greater than $2,500.

      3. Written Claim Submission

        Written follow-up of incidents that have been reported by telephone, and written reports of the following incident types should be submitted; with the original going to UKGC Risk Management and full photocopy to Client's Risk Management.

          1. If it appears that there is ANY basis for a claim, or if a claim has been submitted, forms AD-84 (general) or AD-86 (auto) must be filled out by the Risk Manager. The following relevant information should be included:

          • police report/motor vehicle accident report if available
          • witness statements
          • claimant statements
          • weather reports at time of incident
          • statements from Client's employees to substantiate situation--i.e., grounds keeper
          • photographs of incident location
          • medical bills
          • two property repair estimates
          • scope of employment statement

          2. Medical malpractice incidents should be reported by the medical center directly to UKGC Risk Management where determination of investigation will be made.

          3. Client's risk management should also submit copies of their claim reports to the Client's safety department to assure that loss control efforts may be made.

      4. Summons and Complaint

        Any legal documents such as a Notice of Intent to File or Summons and Complaint should be sent immediately as follows:

          1. Original should be sent to Client's Legal Office by Client's risk management office. Client's Legal will then request the representation of the Attorney General. The Attorney General has only 20 days to respond to the summons.

          2. Telephone notification and copies should be given immediately to:

          • UKGC Risk Management
          • Client's Risk Management

          3. All investigation will then be handled by the Attorney General; however, any additional documentation which is sent to them should be duplicated and sent to Client's Risk Management and UKGC Risk Management for their files.

      5. Claim Investigations, Recommendations, and Denials

        The procedures outlined in this section apply to all Client's divisions unless the risk manager notifies The Client's Office of Risk Management (CORM) that they are unable to take on this responsibility. Any time a Client's Staff chooses to handle investigation of a claim, they should freely use CORM for consultation and guidance in the investigation process. CORM will also continue to monitor claims handling by the Client's risk management office.

        Note:

      In the event of a liability situation involving a leased vehicle, the claim will be handled as any other liability claim would be, with the experience being attributed to the Client's office. Only the damage to the leased vehicle itself (first party property claim) is handled by the leasing fleet person.

        Claim investigation should ensue as follows:

        1. Fact gathering process - compile as much pertinent information as possible from the list above. Determine the circumstances of the loss and the persons involved.

        2. Using the guidelines for negligence above and the facts, determine the extent to which the Client is negligent. It should be noted that negligence can rarely be attributed 100% to one party. Responsibility for claims payment may be allocated based on a percentage of negligence.

        3. If the Client is clearly a majority at fault, send the necessary claimant accident report (AD-84,86) to claimant with a cover letter explaining the procedure. Also obtain damage estimates from claimant. Upon receipt of estimates, the claim information, along with a payment recommendation from the Client's risk manager, should be forwarded to the UKGC Office of Risk Management (ORM) with a copy to CORM. This recommendation should be based on the estimates and the percentage at fault.

        4. If the other party is a majority at fault, the Client will want to both deny their claim and collect for any damages to Client's property. Denial of claims may be sent from the Client's risk manager to the third party using a formal denial letter stating the lack of negligence on the part of the Client, etc. Assistance with denials may be obtained from CORM. Collection for damage to our property can be achieved using a copy of the AD-86, a motor vehicle accident report, and a letter requesting payment. Payment requests should be sent directly to the other party's insurance company with copies to the party.

        5.UKGC Risk Management will make a decision based on the information submitted, the recommendation of the Client's Legal entity, and previous claims of this nature. For this reason, all pertinent information must be sent to ORM in original form as soon as received. Prompt settlement will result in less cost and greater satisfaction for the claimant.

        Loss reserves will be set up by ORM as realistically as possible so as not to penalize the Client for good claim reporting. Loss reserves allow ORM to better estimate their premium needs for the upcoming years.

        The Client will receive a copy of payment or denial by ORM at which time the file may be closed. Claim files should be retained for ten years.

Subject: Contractual Liability Program

  1. Purpose

      2. The purpose of this paper is to discuss the contractual liability issues which face the Client and how these issues may best be controlled by the Client's risk manager.

  2. Background

      3. Contractual liability is any liability or responsibility for loss, which is assumed by the Client under a contract which would normally not be the responsibility of the Client had the contract not existed. For example, when the Client leases property from another party, it assumes responsibility for injuries arising out of the property which would normally be the responsibility of the property owner. Such transfers of liability most often come in the form of hold harmless and indemnity agreements. (These agreements are discussed in detail in Section 4, A of this manual.)

      UKGC Regulation prohibit the Client from signing any contracts which contain promises of indemnification for losses that the Client is not responsible for. This posture is necessary because the UKGC, as a guarantee body, cannot make promises against, or be held responsible for, future unknown debts. Any time a contract is used which contains contractual language that is not within the scope of UKGC Regulation, additional contractual liability insurance must be purchased to cover the exposure. Client's Risk Management administers this coverage as outlined below.

  3. Policy Details

      4. Carrier: (Name of Insurance Company)
      Policy Number: HGL0001803 (for example)
      Policy Date: September 1 (annually)
      Limits: $1M unless otherwise negotiated
      Deductible: $2500 per claim.
      Coverage: This policy covers bodily injury and property damage liability which the Client has assumed through contractual agreements specifically designated in the policy. This coverage is specifically purchased for those contracts which impose liability that cannot be covered by the UKGC Liability Program due to any limitations. Coverage may only be secured after a specific agreement has been reached between the parties regarding the limits of liability.
      Exclusions: Some exclusions include professional liability, war, workers' compensation issues, public authority, liquor liability, damage to property of the insured, pollution liability, etc.

      For more detail on policy coverage please contact The Client's Office of Risk Management (ORM) for a copy of the policy.

  4. Contractual Liability Policy Contracts: (9/1/05 - 9/1/05 as for example)

      5. Contract: Name of Client's party of contract
      Debtor: Client's Name
      Limit: $2,000,000 (for example)
      Description: Electrical cable crossing over railroad (for example)

      Contract: Name of Client's party of contract
      Debtor: Client's Name
      Limit: $1,000,000 (for example)
      Description: Software system to Analyze, Manage and Report on Specimens for the Lab of Hygiene (for example)

      Contract: Name of Client's party of contract
      Debtor: Client's Name
      Limit: $1,000,000 (for example)
      Description: Use and distribution of the Apple Software (for example)

  5. Procedures-Contract Review

      6. When a school, college, department, etc. is presented with a contract from an outside party, whether it be for the use of facilities or equipment, for participation in some event, or for any other purpose, the contract should be sent to the Client's risk management office for evaluation.

      The risk manager should:

        A. Read through the contract to determine if contractual transfers exist in any form.

        B. Evaluate the contractual transfer agreements to determine if the intent of the clause conforms to the acceptable language of the UKGC. Make reference to sections for examples of acceptable language. If the contract does not meet the requirements of the UKGC, then negotiation for inclusion of our standard language should ensue.

        C. If difficulties persist in developing acceptable language, UKGCRM should be consulted for suggestions or alternatives.

        D. If the contract must be accepted by the Client with wording that is incompatible with the statutory requirements, then the contract will have to be insured under the UKGC contractual liability policy. This can only be done when a limit of liability (preferably $500,000) has been negotiated and stated in the contract.

        E. The Client's risk manager should maintain a file of all contractual agreements for a period of ten years to ensure that control of the contractual exposure is met.

        F. Although it is impractical to expect the risk manager review all contracts on Client's office, a good flow of communication between departments will result in increased awareness by the risk manager and department heads. It is the goal of Client's Risk Management that contractual review be addressed as an ongoing risk management function in the course of daily interactions and at the annual risk management conferences.

  6. Procedures-Coverage and Claims

      7. A. To obtain insurance protection for those contracts which are incompatible with UKGC requirements, UKGCRM should be contacted to discuss the situation. Send a copy of the complete contract along with a request for coverage. This should include dates of coverage, limits of liability, contact person on Client's office, and a description of the circumstances surrounding the contract.

      B. With adequate information a quote for the insurance coverage can be obtained from the insurer in 1-2 weeks. The cost to insure each contract varies depending on the limits of insurance required and the risk involved. Feasibility of insurance will have to be determined by the Client's Legal Entity.

      C. Coverage will be bound upon approval of the quote from the Client's repsentative. A certificate of insurance will be issued along with the billing from our broker.

      D. Any claims against the Client which arise out of the contractual agreement should be submitted directly to Client's Risk Management for processing.

  7. Authorization to Sign Documents

      8. A. Client must to issue Resolution approved by the board that the following revised resolution be approved effective immediately:

        That any of the following corporate or administrative officers of the Client-Secretary, Associate Secretary, Assistant Secretary of the Board, the President, any Vice President, and any administrative officer or administrative assistant designated by the President of the Client - is authorized to sign:

        1. Proposals, agreements, contracts and contract supplements with the Government, any of its agencies or departments, any State or municipality or any agency or department thereof or any non-profit organization for research work or any other purposes upon approval of the project by the President or any Vice President of the Client or his designee; and

        2. Certifications, releases, inventory reports, and other documents as required by the government in connection with the termination of the contracts with the Federal government for research and educational services furnished by the Client; and

        3. Applications, notices, bonds, and other instruments required by the Federal government in connection with matters relating to Federal laws and regulations for the purchase and use of tax-free alcohol in the laboratories of the Client; and

        4. Purchase orders and other instruments required by the Federal government for the procurement of narcotics for use in the laboratories of the Client; and

        5. Contracts, leases, and agreements when the consideration is not in excess of $100,000 and is within the budget, and royalty agreements with the Client, subject to the understanding that such actions will be reported to the Board of Directors at each subsequent meeting; and

        6. Transactions of the Client's employee savings bonds accounts.

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