One of the more frequent calls fielded in the Underwriting Department addresses the questions: “How are my vehicles covered?” and “Why should I choose Specified Perils Coverage and not Comprehensive Coverage? Unfortunately, the call usually reaches our ears after an accident occurs once it is too late to change the course of events. If you come away from reading this article learning only one thing, it should be that you should know your coverage before you take that trip.
Automobile Physical Damage (APD) is coverage for damage to district owned vehicles. There are three types of physical damage coverage for motor vehicles: Collision, Comprehensive, and Specified Perils.
The basic difference between the two is that Comprehensive Coverage includes protection for glass breakage, damage done by an animal, and loss resulting from rain, snow, or sleet (whether or not wind driven), while Specified Perils does not.
Specified Perils is a list of ten specific risks that could occur to your vehicles and only these ten risks are covered:
As a program participant, you have the opportunity to review the two coverages and determine which is best for your district. Because they are so similar, cost typically plays a major factor in the decision-making process as Comprehensive Coverage covers a broader range of potential issues and is therefore more expensive than Specified Perils Coverage. The following two scenarios may help you determine which level of coverage is best for your district.
Scenario One
If your District is in an area with deer behind every tree and bush, choosing coverage that excludes this risk may not be the best option. If this is a frequent type of claim and you choose coverage that excludes this risk, the out-of-pocket expense could be greater than you want to pay per year. In this scenario, the best way to determine your coverage is to consider the annual price of Comprehensive Coverage and determine if it is a better long-term value for your district.
Scenario Two
Specified Perils coverage can be useful if you believe you only need certain incidents covered or if the cost savings is a long-term benefit. Assume, the majority of your fleet consists of mowers. In this situation, it’s likely there may not be as great a concern for glass breakage or hitting an animal. Or, perhaps you have a rock chip claim that is not covered by Specified Perils and the total repair estimate is less than the long-term contribution you would pay for Comprehensive Coverage. In this case, looking at the whole picture means you probably saved money in the long-term because the long-term cost savings outweighs a short-term loss expense.
No matter which option you choose, don’t let coverage price govern your choice.
Choosing the right option for your district will save you money and headaches down the road. The key is to look at the whole picture and weigh cost savings and coverage options cautiously. The best part about having your automobile coverage with the TASB Risk Management Fund is that we can help you personalize your coverage to match your unique district needs.
Let us know which coverage works best for your district. Remember, you’re in the driver’s seat. Call our Underwriting Department at 800.482.7276 for any questions you may have.
Portable classrooms are one way to manage the student population growth. Texas law calls them “relocatable educational facilities” (REF) and there are some new construction regulations in effect this year worth noting. REFs were recently added to the list of buildings regulated by the Texas Department of Licensing and Regulation (TDLR). Specifically, these portable classrooms are now classified under Chapter 1022 of the Occupations Code.
Any units purchased or leased after January 1, 2010 must comply with this system of regulation.
Among the new rules:
For more information on these regulations, visit the TDLR website at http://www.license.state.tx.us/ihb/ihb.htm#portables. Please submit questions to industrialized.buildings@license.state.tx.us or call 512.539.5735. If you have a question about your property coverage, please call 800.482.7276 and ask to speak with the Underwriting Department.
It is an age-old question that educational entities face: “Do we need to or are we required to bid our risk management coverage?” A recent change in the competitive procurement requirements along with a review of the acceptable purchasing methods may help to provide a possible solution to this ongoing dilemma.
Effective June 19, 2009, House Bill 987 made changes to school district competitive procurement requirements.
These changes, found in Texas Education Code 44.031, raise the contractual amount that triggers a school district’s duty to competitively procure a contract (other than for the purchase of produce or vehicle fuel) from $25,000 to $50,000. The $25,000 threshold amount had been unchanged since its adoption in 1995.
Purchases valued at $50,000 or more in the aggregate for each 12 month period must still be made by one of nine statutory methods listed below that provide the best value for the district:
In response to this change, districts should also consider updating their local board policy concerning delegation of purchasing authority. This policy is normally found at Board Policy CH (LOCAL).
As stated in the procurement requirements above, a district must select from the nine listed approved methods, which include an interlocal contract, the method that provides the best value to the district. Since their inception, all of the TASB Risk Management Fund (Fund) programs have been and continue to be written via an interlocal contract and as a result, satisfy the competitive procurement requirements as established under Section 44.031 of the Texas Education Code. Therefore, while a district may choose to competitively bid the coverage they have through the Fund, they are not required to do so.
In addition to the peace of mind of knowing the competitive procurement requirements have been satisfied, participation in the Fund’s Property and Liability, Workers’ Compensation, and Unemployment Compensation programs also means members will receive the same comprehensive coverage, exemplary service, and strong financial foundation they have come to know and expect since 1974. To find out more about participation in any of the Fund’s programs, please contact your Risk Management Marketing Consultant at 800.482.7276, ext. 6249.
It’s raining, it’s pouring, the flood alarms are roaring! Oh no! We’re not prepared for this! This is the dilemma some districts find themselves in and, unfortunately, when a flood is at your door, it’s too late to form a plan of action other than wait for it to subside and clean-up the aftermath.
You might be asking yourself, “How do we prepare for a flood?” It’s really not hard to do. The first step is to find out if the property is located in a flood plain. The term “flood zone” is also used for identifying areas that have a tendency to flood, but for this article we will use the term “plain,” commonly used by Federal Emergency Management Agency (FEMA).
Flood zone information can be found at the county’s appraisal district or online at the FEMA website as a free download.
Establishing whether the property is located in a flood plain will determine what Emergency Action Plan you should take. Just because the property is located in an area that is not known to flood does not eliminate the risk of being susceptible to a flood. Because of development and changing environmental factors, an area that is not known to flood can become vulnerable to flooding.
After you have determined if your property is vulnerable to flooding, it’s time to prepare a plan of action to reduce the effects of flood damage. If your district is located in a flood plain, FEMA has developed a checklist (Agency, 2009) of recommended actions:
If your district is not located in an area susceptible to flooding, it is advised to develop a plan of action for a “just in case” scenario. Flooding should be part of your district’s emergency operations plan. This action list is recommended for susceptible and non-susceptible districts:
These are just a few instructions on how to prepare for an emergency flooding situation. It is always better to be prepared for the storm than to not and suffer a total loss of property. Floods are uncontrollable and can happen anywhere and at anytime. Remember, always think “Safety First” and don’t go into unknown flooded areas.
We know you have many choices when deciding which conferences and conventions you attend each year. Most often, your choices are not easy ones to make considering limited budget and time. What conference should you choose that will provide you with the most information? You may need pertinent information on liability or workers’ compensation claims. How do those claims relate to human resources or other tough policy, legal, or employment issues? It’s complicated right? That is why the Fund is your best choice. The Fund Members’ Conference is uniquely positioned to put it all together for you and provide the most comprehensive education available. We boast the largest Texas school risk management conference covering 24 topics and 20 roundtables with various speakers from TASB and expert vendors.
For over 10 years, conference preregistration has been free for Fund members.
We continue this tradition in 2010 so pack your bags and get ready to network with your colleagues and TASB staff for another year.
The conference takes place at the Hyatt Hotel and kicks off on Sunday April 25. Special room rates were contracted at $150 per night, but you must call the hotel to reserve your room by April 2 to get this rate. If you plan to arrive early, be sure to register for the complimentary annual Sunday Early Bird Buffet Dinner from 5:30 – 7:30 p.m. hosted at the Hyatt Hotel.
On Monday April 26, wake up with a great inspirational message from Jim “The Rookie” Morris, the conference keynote speaker. After that, the breakout sessions begin. Make sure you choose which sessions you want to attend when registering. You will get a detailed email confirmation with your chosen topics to take with you to conference. Our lunch program will feature a presentation honoring the 2010 Fund Innovation Award winners. To end an intense day of training, come to the reception from 5-7 p.m. on Monday evening also hosted by the Hyatt. Enjoy complimentary light refreshments with your colleagues and TASB staff before you head out the door to eat and/or explore the Austin scene.
Tuesday April 27, attendees will benefit from another couple rounds of breakout sessions and 20 different conference roundtables. We conclude each year with a special tradition for members. Do not leave early or you will miss out on the Annual Coverage Credit Drawings at Noon for $1,000, $3,000, and $5,000.
If you don’t like your odds with the drawing, do not fret. Did we mention that each member gets renewal coverage credit just for attending the conference? Yes, up to $300 per program based on program membership will be awarded. Details on those credits will be contained in the conference program handed out at the registration booth.
The way we see it, the Fund Members’ Conference is your only choice. Don’t wait! The deadline for registration is April 19, so register today!
In the June 2009 News & Views edition, we informed you about the upcoming implementation of the new Medicare, Medicaid, & SCHIP Extension Act (MMSEA). This legislation is intended to ensure that Medicare does not pay for a beneficiary's care when another insurer has primary responsibility. Besides group health plans, other insurers now include carriers that provide liability, no-fault, and workers’ compensation. Carriers who provide these coverages must now identify the Medicare beneficiary status of claimants and report claim data to Centers for Medicare & Medicaid Services (CMS) on a quarterly basis.
Organizations subject to the MMSEA are called Responsible Reporting Entities (RREs). The TASB Risk Management Fund (Fund) is the RRE for claims reported to us by our members. We will use the CMS Medicare eligibility program to determine each claimant’s beneficiary status and will report any eligible claims to CMS on a quarterly basis.
Potential Medicare recipients fall into three categories:
• Individuals age 65 years or older
• Certain disabled persons (identified by specific diagnosis codes)
• Individuals with permanent kidney failure
In order to identify potential Medicare recipients, the Fund will likely be modifying the initial three-point interview to include questions on whether or not the injured worker is receiving or has applied for Medicare. If they are a beneficiary, we will ask for their Medicare health insurance claim number (HICN). In addition, an effort will be made to verify with the claimant that the social security number provided on the First Report of Injury is correct.
Recently, the mandatory start date for this process was pushed back to January 1, 2011, however, the Fund expects to start the reporting process prior to that date.
We will be required to submit personal information, diagnosis, claim payments, notice of settlements, judgments, or awards where the injured party is a Medicare beneficiary. While the burden to you in this process is minimal, we would like to stress the importance of gaining valid social security data from employees in this national effort to improve the accountability of the Medicare system. This process is new to everyone and, undoubtedly, changes will be made as time goes on. We will continue to keep you informed and answer any questions you may have. For more information, contact June Kissinger or Paul Taylor at 800.482.7276, extensions 3545 or 3663 respectively.
The Fund’s Board of Trustees met on February 5, 2010 at TASB headquarters in Austin. They heard reports from the Audit and Finance Committee, the Claims Committee, and the Member Services Committee.
The Audit Committee and full Board heard a presentation by Michael Murphy, Audit Partner with Deloitte & Touche. The Fund received an unqualified opinion on the 2008-09 audited financials and the Board accepted the audit results. Staff then presented the December 2009 financial statements. The Fund remains in very strong financial health with growth in members’ equity due to investment income. The Board approved the engagement of Deloitte & Touche for the 2009-10 financial audit.
The Claims Committee presented a report on current claims activities and trends. This included an update on Hurricane Ike claims, several significant property/liability claims, and 10 large workers’ compensation claims. The Claims Committee also had a discussion regarding the legislative sunset review of the Texas Department of Insurance and the Division of Workers’ Compensation, Fund members’ non-compliance with mandated reporting requirements, and subrogation against students.
The Member Services Committee reported on membership changes and current marketing conditions. Ed Thompson, TASB staff, presented an update on the new School District Emergency Management and Security Program. Staff is finishing up on the training curriculum for the core programs.
Pilot training for the program will be conducted from February through May 2010.
Based upon the results of the pilot program, staff will present recommendations on program implementation, proposed staffing, and program cost and funding at the July 2010 meeting. The Member Services Committee gave a report on the 2010 Innovation Awards. They received 34 applications from 29 members. The applications were distributed to committee members for their review and to individually vote on the winners. Up to 10 winners will be selected for awards and will be honored at the 2010 Fund Members’ Conference. Finally, the Committee reported on the status of the 2010 Loss Prevention Grant program and plans for the 2010 Fund Members’ Conference to be held in April 2010.
Dubravka Romano, TASB staff, presented reports on the Fund’s Strategic Plan, the Fund’s sponsorship and license agreement negotiations, and the litigation management program. The Board approved the AGRiP Certification of Recognition application.
Prior to the executive session, the meeting concluded all other business with an election of the Nominations Committee, a final report on the special committee on entity board selections, and a discussion of the board meeting schedule and training opportunities.
If you have any questions about this report, contact June Kissinger at 800.482.7276, ext. 3545.
Is your district a member of the TASB Risk Management Fund’s (Fund) Property and Liability program? If so, then heads up! As the spring semester approaches, special events coverage becomes a popular request among Property and Liability members. Because many events such as high school prom, high school graduation, spring sports play-offs, exhibitions, and bazaars occur off-site, many facilities will require that an endorsement adding them as an additional insured be added to the district’s liability coverage.
Additional insured endorsements cannot be added to the Fund’s Property and Liability coverage due to the limitations of the Interlocal Cooperation Act. Because the Fund only provides coverage to educational related entities, we are limited in our ability to provide additional insured endorsements to non-educational entities. However, we can facilitate coverage for members and their special events needs.
The Fund is able to provide coverage with limits of $1,000,000 for each occurrence, with a $2,000,000 general aggregate. The program is fully underwritten by Mid-Continent Casualty Company, which allows the Fund to name additional insureds on these policies. Pricing is based on event attendance per day, number of days, and type of event. If you have questions regarding special events coverage, contact the Underwriting Department at 800.482.7276.
There has been a recurring theme lately on telephone calls received here at TASB. While we wish they were about how claims are decreasing and the economy is picking up, it has been the opposite. More and more member districts are facing budget shortfalls and the increased applications for unemployment that come along with it. That brings us to three letters most districts never want to see together: RIF – Reduction in Force.
While the reasons necessitating a RIF are varied, the end result is similar across the board; some people will lose their jobs. We would like to make sure you have more information at your disposal when making these difficult decisions, as they can further impact your already distressed budget.
According to the Texas Workforce Commission, there are three basic reasons for job separation – fired, quit, and laid off.
The first two reasons generally disqualify an individual for unemployment insurance, so let’s take a look at the third one – laying off employees. This is the primary reason unemployment insurance was created, where employees lose their jobs through no fault of their own. While this is a difficult decision for everyone involved, laying off employees can sometimes create a large and unanticipated financial burden on a school district even after it stops paying those former employees’ salaries.
The current maximum weekly benefit a claimant can receive drawing unemployment is $406 per week for 26 weeks, which tops out if a person earned approximately $42,000 annually. A lesser salary gets a lesser maximum weekly benefit. This means that one fully-funded unemployment claim can initially cost the former employer $10,556. This is money paid after the district has already paid that employee any severance pay, unearned vacation pay, and any salary owed through the end of their contract. The employer will be on the hook for an additional $10,556, and that is before any state emergency benefits take effect. Unfortunately, many employers are learning for the first time about emergency state benefits.
The 26 weeks of unemployment benefits are just a beginning. In the current economic condition, the federal government has offered an emergency unemployment package of 20 weeks, paid for as part of federal legislation (unrelated to any stimulus package). However, after those 20 weeks, a claimant can possibly return to the State of Texas Emergency State Extended Benefits. This can amount to an additional 13 weeks worth of benefits. So if you’re keeping a running tab, one claimant can collect 26 weeks at $10,556, and then get another $5,278 over 13 weeks. That’s $15,834. Plus, the State of Texas has a program called State Extended Benefits for High Unemployment Periods, which can add another seven weeks if the claimant is still filing claims.
With all things considered, the claimant has the potential to receive $18,676 per claim in just over a year.
These are very real costs to consider, especially since the current climate has many claimants taking longer than in the past to secure their next jobs. Take these costs into consideration very carefully when evaluating how much must be trimmed out of a budget. Some districts have found that they are paying higher than expected benefits for longer than expected times, thus not saving as much as was originally planned.
To spare your district from unnecessarily high unemployment costs, try to employ strategies of reassigning personnel where possible, encouraging retirement through TRS, and becoming aware of the amounts of unemployment benefits when considering any severance. Consider who the personnel are when making cuts. Sometimes, employees who report to work timely and with enthusiasm for their job are well worth the effort to retrain and place in other positions instead of making across the board cuts. Claimants who were good employees and still drawing unemployment benefits chargeable to you also make great substitute teachers and should be given serious consideration when a job opening occurs.
For questions from members participating in the TASB Risk Management Fund UC program, call James Ezell at 800.482.7276, ext. 6258.