All Risk Insurance Coverage

Insurance and Risk Management

  1. Purpose

    2. The purpose of this statement is to provide guidance for departments when insuring assets exposed to high risk.

  2. General Guidelines/Applicable Policies

    1. "All Risk" insurance covers direct physical loss to property insured unless the policy specifically excludes or limits the coverage. Coverage for the University is underwritten by the NC Department of Insurance or by various commercial insurers through the State's Agent of Record.

      1. The NC Department of Insurance, State Property Fire Insurance Fund, underwrites two types of "All Risk" insurance. These are:

        1. "All Risk" for Computers and Miscellaneous Equipment: The insured is required to provide a detail listing of all property to be insured including the make, model number, serial number, location and replacement value. Use Form IRM-01 (REV. 4/95)

        2. "All Risk" Special Form: This coverage is primarily used when insuring the total contents of a building and/or the total contents of a University Department within a building. It can also be used by the Department of Insurance to insure other specified items. The insured is required to provide a listing of the total value of the department's building contents by category, i.e. building location, computer equipment, other office equipment (calculator, fax, etc.), office furniture, scientific equipment, lab furniture, etc.

        3. Refer to Exclusions for perils specifically excluded in each type of coverage. Note: Y2K Exclusion, found under the What's Newsection, also applies to these coverages.

      2. Coverage through commercial insurers varies in perils specifically covered. Forms to be completed prior to binding coverage will vary based on the insurer underwriting the coverage. For specific information, contact Insurance and Risk Management.

    2. Premiums for "All Risk" insurance are paid by the University department requesting the coverage. The rate for Computer All Risk is $ .24 per $100 and Miscellaneous All Risk is $ .40 per $100.

    3. Examples of property protected under this type of insurance are computers, fine arts, musical instruments, video equipment, scientific equipment and other valuable equipment and/or business personal property. Entire contents of buildings may also be covered by this type of coverage.

    4. During the 1985 session of the General Assembly, H.B. 488 was enacted to provide for insurance coverage under the State Property Fire Insurance Fund to be on a replacement cost basis instead of an actual cash value basis (replacement cost minus depreciation). When insuring equipment for all risk coverage, items should be listed with current replacement cost (RC).

      5. RC is defined as: the actual cost to replace the property at the time of loss without deduction for depreciation. If you do not use the RC and later during the coverage period you suffer a loss, the claim will be adjusted using the RC at the time of the loss, or the RC listed on the form you submitted to us whichever is less. Claim settlements will never be more than the RC listed on the form submitted to us. If the item which has been damaged or lost is discontinued, the claim will be adjusted on the RC of the next most comparable model manufactured by the vendor, but again never more than the RC listed on the form submitted to us. To obtain the RC for your insured property, simply call the vendor to obtain the correct dollar amount. If the item, which has been damaged or lost, is discontinued, request from the vendor the current price of the next most comparable model. Insured values should be updated by the department to keep up with the current RC as necessary.

    5. Effective July 1, 1987, the Department of Insurance requires $500 deductible on all loss payments except theft losses, which have a deductible of $1,000.

  3. Procedures

    1. Assets being insured must be listed on the All Risk Insurance Equipment Listing Form, IRM-01 or your own similar form with the same information.

    2. When listing assets for all risk coverage, items should be listed with current replacement cost (RC).

    3. Computer equipment must be listed separately from all other miscellaneous equipment unless you are insuring under "All Risk" Special Form.

    4. A pre-authorization form, IRM-03, must be filled out whenever the coverage is started or equipment is added or deleted to the coverage. A pre-authorization form is required for each type of coverage, computer all risk coverage and/or miscellaneous all risk coverage.

    5. If additions and/or deletions are made to the coverage anytime during the fiscal year, the same listing form, IRM-01, should be used, marking the appropriate box at the top. DO NOT LIST ADDITIONS AND DELETIONS ON THE SAME FORM.

    6. Insurance and Risk Management will debit/credit the department's account based on the pre-authorization.

    7. The renewal date for All Risk Insurance coverage is July 1 of each year. Each department with this type coverage will receive a memo prior to renewal and will be given an opportunity to update their equipment lists and pre-authorizations each year.

    8. As necessary, or six (6) months after renewal, the department should update the replacement cost values (RC) so they will be in line with the current market. Updating your equipment lists is not mandatory. It will be the department's choice to do so and their responsibility to notify the Insurance and Risk Management Office of the updates. It would be to the department's advantage to update the lists to assure a fair return on your claim losses.

    9. Any adjustments in the department's equipment RC later in the year will be debited/credited to the department's account at half the rate. Remember, if changes are made later in the year to the department's RCs, a pre-authorization form must accompany the updates. To update the RCs later in the coverage period, simply use the equipment listing form. Check the box at the top of the form that reads: ADJUST REPLACEMENT COST, then list only the items being updated and their new RC. Send your updates with a pre-authorization form to Insurance and Risk Management.

    10. If the department suffers a loss of any insured equipment under the All Risk Insurance coverage, please notify the Insurance and Risk Management Department by noon of the next work day following the incident followed with written confirmation, details, and repair or replacement invoices of the loss. The department must also submit to Insurance and Risk Management a copy of the requisition, purchase order, or invoice showing purchase of the loss item(s) and also a copy of the purchase order or invoice showing replacement of the loss item(s). Insurance and Risk Management will then file a claim on behalf of the department.

  4. Forms

    5. The All Risk Insurance Equipment Listing Form IRM-01, the All Risk Insurance Pre-Authorization Form IRM-03, and the Computer Loss Form, SPF-DOI-2 may be obtained from the IRM website under Forms, and photocopied as necessary.


    EXCLUSIONS


    "ALL RISK" PROPERTY EXCLUSIONS

    (Special Form)

    Throughout this form the words "you" and "yours" refer to the insured State Agency shown in the Declarations. The word "Fund" refers to the State Property Fire Insurance Fund. The words "business personal property" refers to University-owned property.

    Words and phrases that appear in quotation marks have special meaning. Refer to Section F. - Definitions.


    1. COVERED CAUSES OF LOSS

      When "All Risk" is shown in the Declarations, Covered Causes of Loss means RISKS OF DIRECT PHYSICAL LOSS unless the loss is:

      1. Excluded in Section B., Exclusions: or

      2. Limited in Section C., Limitations; that follow.

    2. EXCLUSIONS

      1. The Fund will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

        1. Ordinance or Law

          The enforcement of any ordinance of law:

          1. Regulating the construction, use or repair of any property; or

          2. Requiring the tearing down of any property, including the cost of removing its debris.

          This exclusion, Ordinance or Law, applies whether the loss results from:

          1. An ordinance or law that is enforced even if the property has not been damaged; or

          2. The increased cost incurred to comply with an ordinance or law in the course of construction, repair, renovation, remodeling or demolition of property, or removal of its debris, following a physical loss to that property

        2. Governmental Action

          Seizure or destruction of property by order of governmental authority

          But the Fund will pay for loss or damage caused by or resulting from acts of destruction ordered by governmental authority and taken at the time of a fire to prevent its spread, if the fire would be covered under this Coverage Part.

        3. Nuclear Hazard

          Nuclear reaction or radiation, or radioactive contamination however caused.

          But if nuclear reaction or radiation, or radioactive contamination, results in fire the Fund will pay for the loss or damage caused by that fire.

        4. Utility Services

          The failure of power or other utility service supplied to the described premises, however caused, if the failure occurs away from the described premises.

          But if the failure of power or other utility service results in a Covered Cause of Loss, the Fund will pay for the loss or damage caused by that Covered Loss.

          This exclusion does not apply to the Business Income coverage or to Extra Expense coverage. Instead, the Special Exclusion in paragraph B.4.a. applies to these coverages.

        5. War and Military Action

          1. War, including undeclared or civil war;

          2. Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents, or

          3. Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.

        6. Water

          1. Flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not;

          2. Mudslide or mudflow

          3. Water that backs up or overflows from a sewer, drain or sump; or

          4. Water under the ground surface pressing on, or flowing or seeping through:

            1. Foundations, walls, floors, or paved surfaces

            2. Basements, whether paved or not; or

            3. Doors, windows or other openings.

          But if Water, as described in f.(1) through f.(4) above, results in fire, explosion or sprinkler leakage, the Fund will pay for the loss or damage caused by that fire, explosion or sprinkler leakage.

          NOTE: FLOOD COVERAGE MAY BE PURCHASED FOR AN ADDITIONAL PREMIUM.

      2. The Fund will not pay for loss or damage caused by or resulting from any of the following:

        1. Artificially generated electrical current, including electric arcing, that disturbs electrical devices, appliances or wires. But if artificially generated electrical current results in fire, the Fund will pay for the loss or damaged caused by the fire.

        2. Delay, loss of use or loss of market.

        3. Smoke, vapor or gas from agricultural smudging or industrial operations.

          1. Wear and tear;

          2. Rust corrosion, fungus, decay, deterioration, hidden or latent defect or any quality in property that causes it to damage or destroy itself.

          3. Smog;

          4. Settling, cracking, shrinking or expansion;

          5. Nesting or infestation, or discharge or release of waste products or secretions, by insects, birds, rodents or other animals.

          6. Mechanical breakdown, including rupture or bursting caused by centrifugal force. But if mechanical breakdown results in elevator collision, the Fund will pay for the loss or damage caused by that elevator collision.

          7. The following causes of loss to business personal property:

            1. Dampness or dryness of atmosphere;

            2. Changes in or extremes of temperature; or

            3. Marring or scratching.

          But if an excluded cause of loss that is listed in 2.d (1) through (7) results in a "specified cause of loss" or building glass breakage, the Fund will pay for the loss or damage caused by that "specified cause of loss" or building glass breakage.

        5. Explosion of steam boilers, steam pipes, steam engines or steam turbines owned or leased by you, or operated under your control. But if explosion of steam boilers, steam pipes, steam engines or steam turbines results in fire or combustion explosion, the Fund will pay for the loss or damage caused by that fire or combustion explosion. The Fund will also pay for loss or damage caused by or resulting from the explosion of gases or fuel within the furnace of any fired vessel or within the flues or passages through which the gases or combustion pass.

        6. Continuous or repeated seepage or leakage of water that occurs over a period of 14 days or more

        7. Water, other liquids, powder or molten material that leaks or flows from plumbing, heating, air conditioning or other equipment (except fire protective systems) caused by or resulting from freezing, unless:

          1. You do your best to maintain heat in the building or structure; or

          2. You drain the equipment and shut off the supply if the heat is not maintained.

        8. Dishonest or criminal act by you, any of your partners, employees (including leased employees), directors, trustees, authorized representatives or anyone to whom you entrust the property for any purpose:

          1. Acting alone or in collusion with others; or

          2. Whether or not occurring during the house of employment.

          This exclusion does not apply to acts of destruction by your employees (including leased employees); but theft by employees (including leased employees) is not covered.

        9. Voluntary parting with any property by you or anyone else to whom you have entrusted the property if induced to do so by any fraudulent scheme, trick, device or false pretense.

        10. Rain, snow, ice or sleet to business personal property in the open.

        11. Collapse, except as provided below in the Additional coverage for Collapse. But if collapse results in a Covered Cause of Loss at the described premises, the Fund will pay for the loss or damage caused by that Covered Cause of Loss.

        12. Discharge, dispersal, seepage, migration, release or escape of "pollutants" unless the discharge, dispersal, seepage, migration, release or escape is itself caused by any of the "specified cases of loss". But if the discharge, dispersal, seepage, migration, release, or escape of "pollutants" results in a "specified cause of loss", the Fund will pay for the loss or damage caused by that "specified cause of loss".

      3. The Fund will not pay for loss or damage caused by or resulting from any of the following, 3.a. through 3.c. But if an excluded cause of loss that is listed in 3.a. through 3.c. results in a Covered Cause of Loss, the Fund will pay for the loss or damage caused by that Covered Cause of Loss.

        1. Weather conditions. But this exclusion only applies if weather conditions contribute in any way with a cause or event excluded in paragraph 1. above to produce the loss or damage.

        2. Acts or decisions, including the failure to act or decide, of any person, group, organization or governmental body.

        3. Faulty, inadequate or defective:

          1. Planning, zoning, development, surveying, siting;

          2. Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction;

          3. Materials used in repair, construction, renovation or remodeling; or

          4. Maintenance;

            of part or all of any property on or off the described premises.

      4. Special Exclusions

        The following provisions apply only to the specified Coverage Forms.

        Business Income (And Extra Expense) Coverage Form, Business Income (Without Extra Expense) Coverage Form, or Extra Expense Coverage Form

        The Fund will not pay for:

        1. Any loss caused directly or indirectly by the failure of power or other utility service supplied to the described premises, however caused, if the failure occurs outside of a covered building.

          But if the failure of power or other utility service results in a Covered Cause of Loss, the Fund will pay for the loss resulting from that Covered Cause of Loss.

        2. Any loss caused by or resulting from

          1. Damage or destruction of "finished stock"; or

          2. The time required to reproduce "finished stock"

          This exclusion does not apply to Extra Expense.

        3. Any loss caused by or resulting from direct physical loss or damage to radio or television antennas (including satellite dishes) and their lead-in wiring, masts or towers.

        4. Any increase of loss caused by or resulting from:

          1. Delay in rebuilding, repairing or replacing the property or resuming "operation", due to interference at the location of the rebuilding, repair or replacement by strikers or other persons; or

          2. Suspension, lapse or cancellation of any license, lease or contract. But if the suspension, lapse or cancellation is directly caused by the suspension of "operations" the Fund will cover such loss that affects your Business Income during the "period of restoration"

        5. Any Extra Expense caused by or resulting from suspension, lapse, or cancellation of any license, lease or contract beyond the "period of restoration".

        6. Any other consequential loss.

    3. LIMITATIONS

      The following limitations apply to all policy forms and endorsements, unless otherwise stated.

      1. The Fund will not pay for loss or damage to property, as described and limited in this section. In addition, the Fund will not pay for any loss that is a consequence of loss or damage as described and limited in this section.

        1. Steam boilers, steam pipes, steam engines or steam turbines caused by or resulting from any condition or event inside such equipment. But the Fund will pay for loss of or damage to such equipment caused by or resulting from an explosion of gases or fuel within the furnace of any fired vessel or within the flues or passages through which the gases of combustion pass.

        2. Hot water boilers or other water heating equipment caused by or resulting from any condition or event inside such boilers or equipment, other than an explosion.

        3. The interior of any building or structure, or to business personal property in the building or structure, caused by or resulting from rain, snow, sleet, ice, sand or dust, whether driven by wind or not, unless:

          1. The building or structure first sustains damage by a Covered Cause of Loss to its roof or walls through which the rain, snow, sleet, ice, sand or dust enters; or

          2. The loss or damage is caused by or results from thawing of snow, sleet or ice on the building or structure.

        4. Building materials and supplies not attached as part of the building or structure, caused by or resulting from theft.

          However, this limitation does not apply to:

          1. Building materials and supplies held for sale by you, unless they are insured under the Builders Risk Coverage Form; or

          2. Business Income coverage or Extra Expense coverage.

        5. Property that is missing, where the only evidence of the loss or damage is a shortage disclosed on taking inventory, or other instances where there is no physical evidence to show what happened to the property.

        6. Gutters and downspouts caused by or resulting from weight of snow, ice or sleet.

        7. Property that has been transferred to a person or to a place outside the described premises on the basis of unauthorized instructions.

      2. The Fund will not pay the cost to repair any defect to a system or appliance from which water, other liquid, powder or molten material escapes. But the Fund will pay the cost to repair or replace damaged parts of fire extinguishing equipment if the damage:

        1. Results in discharge of any substance from an automatic fire protection system; or

        2. Is directly caused by freezing.

        However, this limitation does not apply to Business Income coverage or to Extra Expense coverage.

    4. ADDITIONAL COVERAGE - COLLAPSE

      The term Covered Cause of Loss includes the Additional Coverage - Collapse as described and limited in D.1. through D.5. below.

      1. The Fund will pay for direct physical loss or damage to Covered Property, caused by collapse of a building or any part of a building insured under this Coverage Form, if the collapse is caused by one or more of the following:

        1. The "specified causes of loss" only as insured against in this Coverage Part;

        2. Hidden decay;

        3. Hidden insect or vermin damage;

        4. Weight of people or personal property;

        5. Weight of rain that collects on a roof;

        6. Use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation. However, if the collapse occurs after construction, remodeling or renovation is complete and is caused in part by a cause of loss listed in D.1.a. through D.1.e., the Fund will pay for the loss or damage even if use of detective material or methods, in construction, remodeling or renovation, contributes to the collapse.

      2. If the direct physical loss or damage does not involve collapse of a building or any part of a building, the Fund will pay for loss or damage to Covered Property caused by the collapse of business personal property only if

        1. The business personal property which collapses is inside a building; and

        2. The collapse was caused by a cause of loss listed in D.1.a. through D.1.f. above.

      3. With respect to the following property.

        1. Outdoor radio or television antennas (including satellite dishes) and their lead-in wiring, masts or tower;

        2. Awnings, gutters and downspouts;

        3. Yard fixtures;

        4. Outdoor swimming pools;

        5. Fences;

        6. Piers, wharves and docks;

        7. Beach or diving platforms or appurtenances;

        8. Retaining walls; and

        9. Walks, roadways and other paved surfaces;

        if the collapse is caused by a cause of loss listed in D.1.b. through D.1.f., we will pay for loss or damage to that property only if:

        1. Such loss or damage is a direct result of the collapse of a building insured under this Coverage Form; and

        2. The property is Covered Property under this Coverage Form.

      4. Collapse does not include settling, cracking , shrinkage, bulging or expansion.

      5. This Additional Coverage - Collapse, will not increase the Limits of Insurance provided in this Coverage Part.

    5. DEFINITIONS

      "Specified Causes of Loss" means the following: Fire; lightning; explosion; windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire extinguishing equipment, sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet, water damage.

      1. Sinkhole collapse means the sudden sinking or collapse of land into underground empty spaces created by the action of water on limestone or dolomite. This cause of loss does not include:

        1. The cost of filing sinkholes; or

        2. Sinking or collapse of land into man-made underground cavities.

      2. Falling objects does not include loss or damage to:

        1. Personal property in the open; or

        2. The interior of a building or structure, or property inside a building or structure, unless the roof of an outside wall of the building or structure is first damaged by a falling object.

      3. Water damage means accidental discharge or leakage of water or steam as the direct result of the breaking apart or cracking of any part of a system or appliance (other than a sump system including its related equipment and parts) containing water or steam.



        "ALL RISK" COVERAGE EXCLUSIONS

        (Computers And Miscellaneous Equipment)

        The State Property Fire Insurance Fund will not pay for a loss which is due to the following causes:

        1. Wear and tear, gradual deterioration, depreciation, insects, or vermin.

        2. Fraudulent, dishonest or criminal acts (other than vandalism or malicious mischief) committed alone or in collusion with others by:

          1. Your agency, or employees, officers, directors, partners or trustees of your agency, whether or not such acts be committed during regular business hours; or

          2. others to whom the covered property may be entrusted (carriers for hire excepted).

        3. Error in machine programming or instructions to the machine.

        4. Processing operations or work upon the property covered, unless the loss is caused by fire or explosion, and then only for the damage caused by the fire or explosion.

        5. Delay, loss of market, loss of income or interruption of business.

        6. War and Military Action

          1. War, including undeclared or civil war

          2. Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or

          3. Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.

          4. Seizure or destruction under quarantine or customs regulations, confiscation by order of any government or public authority, or risks of contraband or illegal transportation or trade.

        7. Nuclear reaction or radiation or radioactive contamination, however caused. But if loss or damage by fire results, the Fund will pay for that resulting loss or damage.

        8. Mechanical breakdown, faulty construction, error or omission in design. The Fund will pay for direct loss caused by resulting fire or explosion.

        9. Dryness or dampness of atmosphere, extremes of temperature, corrosion, or rust unless directly resulting from physical damage to the electronic equipment system's air conditioning facilities.

        10. Interruption of power supply, power surge, blackout or brownout, if the cause of such occurrence took place more than 1,000 feet from the described location.

        11. Electrical or magnetic injury, disturbance or erasure of electronic recordings, if the cause of such occurrence took place more than 1,000 feet from the described location.