Coverages Page

We receive many questions about who is covered and what is covered by IU's insurance - actually a combination of commercial insurance and self insurance.

What we stress here is the need to escape the mentality of, "Oh, well, the insurance company will pay for this." We pay and the insurance companies never get involved until IU has paid a substantial sum from its own coffers.

Why? This arrangement saves us money. But - and this is important - the more each one of us can do to prevent losses, the better the university and each of us is served.

What is the employee bond?

The employee bond provides coverage for an act of employee dishonesty. The beneficiary is IU, in other words, the department that suffered the loss.

Important points to remember are

• As soon as a loss is suspected or discovered, it must be reported to
1. IUPD
2. Internal Audit
3. Risk Management
• Coverage ceases as soon as the employee(s) can be identified or reasonable suspicion established. E.g., In July, you discover Dave, a trusted employee of twenty years, is falsifying time slips. Because you've known him so long, you give him a chance to straighten up. In December, you give up because he is still stealing. Your coverage ended in July.
• When an employee is identified in one of these losses, they MUST be dismissed. We can't continue to employ people who steal.
• That employee can never be covered again in any position at IU.
• The decision to prosecute or not prosecute is not at the discretion of the department. Remember, the University is the victim, not the individual department.
• Failure to report such losses makes those who know of them - and then fail to report them - as culpable as the person stealing.
• We will investigate anonymous tips.
• We pay based on the Internal Audit report, subject to a $1,000 deductible.
• All employees are covered, hourly or full time.

A source of confusion through the years has been the "rule" that only exempt employees can control money through, for instance, authorizing check requests. There is no such rule. "Exempt" and "non-exempt" classifications have nothing to do with who is covered by the employee bond, and never have been a factor.

What is important is

• Establishing the proper controls; Internal Audit can help.
• Watching your financial records for problems. Some of our biggest losses have gone on and on because the account manager was not checking their monthly transaction reports.
• Using some common sense.
  1. Don't keep petty cash in an envelope. Use a locking cash box.
  2. Control access. Make sure you control who has keys and combinations and change combinations when someone leaves.
  3. Endorse checks properly.
  4. KEEP AN EYE ON YOUR ACCOUNTS!

Coverage for rental vehicles

We encourage the use of either Enterprise or National when renting vehicles. We have arrangements with both companies that, from an insurance coverage perspective, are to our advantage.

When renting a vehicle in North America in the course of your work for the University IU will not pay for any supplemental insurance coverages. You do not need supplemental liability or damage-to-rental-vehicle coverage while on IU business.

We include in "IU business" reasonable extensions of your activities. E.g., if you are on business in Chicago, you may need to drive somewhere to eat. That is a reasonable extension. On the other hand, if you are in Orlando, going to visit Disney is probably not a reasonable extension of IU business. If you are going to use the vehicle for such personal activities you should discuss the need for additional coverage with your personal insurance agent.

If you are renting a vehicle outside North America contact Larry Shaver, Kutina England, or Larry Stephens to discuss coverage.

Use of personal vehicles

When a personal vehicle is used in the course of your duties as an IU employee (or volunteer), the insurance covering the vehicle is primary. As an example:

• You use your car to move IU property "on the job" and cause a collision.
• You are at fault.
• You carry $250,000 liability insurance.
• You are sued.
• The judgment is $400,000.

Your insurance would pay its $250,000 limit. IU would indemnify you for the $150,000 over that. Note the fact that you were involved in the accident while acting within the scope of your duties.

For exceptions to this policy, contact Larry Shaver.

Application of deductibles

Repeated losses

Salvage from losses

Unreasonable losses

Repeated losses

Risk is a part of everything Indiana University does (just as it is in our private lives). The Office of Risk Management exists to support IU's mission and we provide monetary coverage for loss caused by these risk factors.

But, it's incumbent upon the university community to accept the responsibility of protecting university assets. This becomes a business decision: Are the losses, or the chance of loss, acceptable when compared to the value of the activity, or the cost of decreasing the probability of loss?

This implies a shared burden between the general university community and risk management. To reinforce this, ORM reserves the right to apply deductibles to repeated losses of a similar nature, including liability and auto losses. Some examples:

• Repeated thefts of incoming shipments from a receiving area
• Repeated fires in a lab due to improper storage of flammables
• Repeated losses of field equipment due to poor security, or using the equipment in an unreasonably hostile environment
• Repeated injuries due to an unsafe situation that could be corrected

We use a sliding time window of six months to help define "repeated". If a loss is suffered, we determine if there were other similar losses within the previous six months.

If there are similar losses that were covered by our insurance plan, a deductible may be applied. The deductible will be:

• For the second loss, 10% of the insurable loss;
• For the third loss, 20% of the insurable loss;
• For the fourth loss, 30% of the insurable loss;
• For the fifth loss, 40% of the insurable loss;
• For the sixth (and subsequest) loss, 50% of the insurable loss;

Unreasonable losses

If the University suffers a loss due to the unreasonable actions of a university agent (an employee or volunteer), that agent's department may be assessed a part of the loss - a deductible. Examples of unreasonable losses:

• Allowing a person with a known poor driving record or suspended license drive;
• Drilling holes (with subsequent damage) in a piece of equipment marked "Do Not Drill";
• Leaving shipments on an unlocked, unattended dock;

The deductible will be 10% of the loss, subject to a minimum of $500 and a maximum of $10,000.

Application of deductibles

Only one deductible will apply per loss. When there are two potentially applicable deductibles, the greatest shall be applied.

Salvage from losses

A loss may be paid on the basis of the repair cost for property. (This may be a loss to university property or to the property of others.) Or, it may be paid based on the actual cash value or replacement cost value of the property (known as a "total loss").

In the event of a "total loss", the Office of Risk Management reserves the right to take the property in question as salvage, to be disposed of according to university policies and procedures. As an alternative, we may reach an agreed value for the salvage and take that as a credit from the loss payable.

We can provide short-term medical insurance for groups participating in an away-from-campus or special on-campus activity.

Away-from-campus activities include kayaking trips, short course set in the mountains, camping trips...

On-campus activities are groups who are not campus residents coming to campus for an activity, such as a training camp.

Organizers of these activities should never make any representation that the university will be responsible for medical bills arising from injuries or illnesses that occur doing the activity planned.

The cost of this coverage is minimal (currently 50¢/day/person). The benefits are limited - $3,000 for accidental injury, $1,000 for illness - so it should be considered first-aid coverage, but it is helpful for those who receive minor injuries.

Contact Pam Holland (812-855-9758, Fax 855-9320) for further details.

When you carry equipment, e.g., several cases of photography equipment, into another country you face the issue of import regulations and taxes. From a university perspective the intent will usually be that you intend to remove (re-export) the equipment when you task is done.

If your intent is to re-export then you will probably be required to obtain a carnet bond. (You should check with your travel planners for laws on importation on a country-by-country basis.) A carnet bond is a guarantee that you will re-export the equipment and, therefore, you should not have to pay import duties on that equipment.

We will obtain the carnet bond for you. Contact Pam Holland (812-855-9758, Fax 855-9320). She will need a complete list of items (full description, serial numbers, cost) and the account to charge for the cost of the bond. Please allow 3 - 4 weeks to process the application. These cannot be obtained overnight.

You must notify us when you return and the items have been re-exported so the bond can be cancelled!

Are volunteers "covered"?

There are three usual concerns about coverage for volunteers:

• Injuries to them
• Injuries or damage caused by them
• Use of personal autos

Injuries to them

Since a volunteer is, by definition, not an employee, workers compensation coverage does not apply to them. However, we do offer some self insured coverage for a volunteer injured "in the course of" and "arising out of" their volunteering.

Coverage is limited to $5,000 to cover reasonable medical expenses. We apply workers compensation guidelines (since they are the best we have) to determine what is reasonable and what injuries we would cover. If a volunteer is injured, report it to us just as you would an employee injury, but clearly marking the form "VOLUNTEER".

Injuries or damage caused by them

We can be held liable for the actions of a volunteer the same as an employee. They are our "agents". Too many times proper attention is not given to recruiting volunteers or supervising them, but the same care must be exercised as with employees.

Use of personal autos

See the autos section.

• In the course of...  An injury arising in the course of your job means it happens while you are on the job - while you are working (or volunteering) within the scope of your assigned duties and any reasonably associated activities. (Return to volunteers section)
• Arising out of...  An injury arises out of your job is it is caused by something relative to the job. The best way to understand this is by example. (1) I work for the grounds crew and suffer a back injury while lifting a bag of fertilizer - that arises out of my job. (2) I work as a cook in a dining hall. My spouse, still upset from an argument last night, walks in and shoots me. That doesn't arise out of the job. (Based on an actual case.)(Return to volunteers section)