Shipping of University property introduces special insurance issues that departments need to consider well in advance of the actual shipment. There are distinctly different requirements for University owned property, versus non-owned property for which we are assuming shipping and handling responsibility.
The University's property coverage is comprehensive. Coverage of University owned property is on an "all risk" basis for insurable losses anywhere in the world. Coverage is for the actual cash value (depreciated not replacement value) for items worth $100 or more. What this means is that additional shipping insurance for University owned property is usually not necessary, provided a loss event can be properly documented.
If an insurable loss happens to University property during shipment, departments have the burden of proving to the insurance adjustor the following:
Of these, evidence of the loss can be problematic for several reasons. If University property is shipped without additional shipping insurance (relying on our normal property coverage described above), and a loss occurs, it is possible that the shipper will not bother to generate useful evidence of the loss. Similarly, the receiving department may dispose of a shipment that is received damaged, not realizing that the damaged goods are needed as evidence of the loss. Loss evidence includes exception reports, transfer receipts, or broken boxes or parts. Without appropriate evidence of the loss, adjusters will not pay a claim.
It is not uncommon for property to be shipped that the University does not own, but has a direct interest in. Examples include equipment or collections being loaned or rented to the U of A. Gifted property is also sometimes shipped before title transfers to the University. The specific arrangements with the lender or donor often dictate how shipping is arranged.
If the U of A is accepting title to gifted property prior to shipping, then the U of A department accepting the gift should take control of the shipping process to ensure proper recordkeeping in the event of a loss.
Non-owned property can be insured under the University's property coverage only if there is a contract, lease or other written agreement that assigns the responsibility for insurance to the University.
The contract must clearly identify the property to be covered, and define the basis on which any loss will be valued. Without a written agreement, the state has no obligation to insure the property, and will deny any claims that arise. University contracts must meet ABOR requirements, and may only be signed by authorized Contracting Officers.
If you have any question about shipping insurance, contact the Steve Holland at 621-1556 well in advance of shipment for advice. This is especially important for non-owned property because contracts often require negotiation and revision to meet ABOR and state requirements.
The following general recommendations also apply:
Although statutory state insurance coverage for shipments is available as described above, some departments may wish to purchase full replacement coverage from shippers anyway. There is no policy prohibiting such duplicate coverage, but the full cost of such insurance must be borne by the department.
The benefits of purchasing insurance include:
The disadvantage is the cost of the insurance to the department.
Departments have purchased insurance on equipment for less than full value attempting to generate shipping records while minimizing departmental cost. With any loss paid by the state, the State will always have the right to subrogate the loss to any other potentially responsible party, such as the shipping firm. The University can take no action that waives or restricts the State's right of subrogation. Purchasing partial coverage may be a restriction on the State's right of subrogation. Recovery is usually limited to the to the amount of purchased coverage. The shipping firm will not pay beyond the amount of purchased coverage when the option to purchase additional coverage was available. The State, after consideration, may decide not to pay beyond the purchased coverage.
Departments are advised by Risk Management to know that the shipper will generate the needed evidence and either purchase no insurance or purchase insurance to the full value of the item being shipped. If the department desires to purchase insurance and the value of the item being shipped exceeds the insurance offered by the shipper, call Joy Baine at 621-3482 for further instructions in particular situations.
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