Self insurance

Throughout the web pages (and other documentation) for the Office of Risk Management you will see numerous references to "self insurance" and "coverages."

Self insurance, as insurance texts are quick to point out, is a misnomer. The very definition of insurance makes "self" insurance impossible.

Why, then, do we use that term so often?

Because it's the simplest term to use to express what we do. It's a phrase that makes the concept of what we do - if not the reality - easy for everyone to understand.

How we protect ourselves - the university - from financial loss due to damage to property or liabilities from the action of third parties (and this includes workers compensation claims) may be one (or a combination) of three ways:

• Commercial insurance
  
  These are insurance policies purchased from commercial insurance companies. In many (most, actually) cases the commercial insurance will have a large deductible or retention. This is true "insurance."
  
  
• "Self insurance"
  
  We use self insurance to describe those exposures to loss that we fund internally. This may be funding the deductible or retention of the commercial insurance we buy or, in some cases, to cover an exposure for which we buy no commercial insurance.
  
  It's especially important to understand what this means in the area of liability claims and how it may affect employees of the university.
  
  Under the retained ("self insured") part of our plan we do not actually insure anyone. We may, for the sake of convenience, sometimes use that terminology, but we do not and cannot insure anyone ourselves. We do indemnify our agents - usually this means our employees but can mean volunteers and others - to protect them from liability claims arising from their actions within the scope of their duties. Operating under a Trustees' resolution, this indemnification of agents is without limit. (But, to qualify you must be an "agent" and one measure of this is acting within the expected scope of your duties.)
  
  We may also voluntarily elect to indemnify someone, such as a non-agent driver of one of our vehicles. We may place limits on the amount of indemnification and it is never "insurance."
  
  
• Non-covered losses
  
  Some losses are not "covered" by any reserved funds, commercial insurance or internal funds. These are pay-as-you-go claims, akin to the deductible on your personal auto insurance.

Another term you will see used in "covered" by insurance. In reference to liability claims, we do "cover" the university (and agents) because we purchase commercial insurance. However, there is also an element of retained claims (self insurance). Technically, we do not "cover" anyone with the self insurance portion of the program, but we use the term "coverage" to describe providing indemnification.

If you have further questions about insurance, "self insurance" or any other topic covered here, contact Larry Stephens or Larry Shaver