Minimum Insurance Requirements for Service Agreements, Contracts, and Purchases (including Vendors & Contractors)
Service Agreements Insurance Requirements from Executive Order 1069
Executive Order 1069 defines insurance requirements for agreements, contracts, and purchases. The campus may also choose to increase insurance coverage amounts above what EO 1069 requires.
The process for verifying appropriate insurance coverage is on a case by case basis. Each event or service has unique characteristics. The types of insurance and limits of coverage a vendor carries may vary somewhat from the standards set forth in EO 1069 or those advertised in the Request for Proposal package. Therefore, Risk Management will carefully analyze each to make a determination if coverage is acceptable. Standards apply to all vendors however, exceptions to coverage can be made upon consultation with the Risk Manager.
The vendor is expected to provide proof of coverage that insurance standards are met prior to work occurring.
The majority of service orders and contracts necessitate general insurance requirements per EO 1069 as follows:
General Liability: comprehensive or commercial form minimum limits each Occurrence $1,000,000, General Aggregate $2,000,000.
Employer Liability: $1,000,000.
Business Automobile Liability: minimum limits for Owned, Scheduled, Non-Owned, or Hired Automobiles with a combined single limit of not less than $1,000,000 per occurrence.
Workers' Compensation: as required under California State Law.
Errors and Omission insurance is required for professional service consultants and professional service design architects/engineers.
Hold Harmless Provision: reference CSU General Provisions for Service Agreements as maintained in the Contract Resource Library.
Exceptions: The limits shown above will generally be required for service providers involved in low-risk activities. Higher limits will be required for service providers performing potentially high-risk activities. Campus risk managers should be consulted for the minimum requirements.
Evidence of Adequate Coverage - Insurance Requirements
Evidence of adequate insurance coverage is required by furnishing to the University a certificate of insurance that includes an additional insured endorsement and each insurer shall have an A.M. Best (or equivalent) rating of at least A:VII unless otherwise agreed to by the University.
An additional insured endorsement must accompany each certificate (workers' compensation excepted). Standard insurance form #CG 20 10 10 01 is accepted - Endorsement is to be on a separate page and the wording on the endorsement is to be exactly as follows:
- The State of California; the Trustees of The California State University; California State University, Chico; and the officers, employees, volunteers and agents of each of them are included as additional insureds.
- Coverage shall not be cancelled, modified, or reduced without thirty (30) days advance written notice to the University, delivered by certified mail, return receipt requested.
Types of Insurance - Basic Definitions
- Business (or commercial) Automobile - provides coverage for business automobiles regardless of whether they are owned, leased, hired or borrowed.
- Employer Liability / Workers Compensation Insurance - provides four types of benefits for job related injuries or disease. They are medical care, disability, death, and rehabilitation.
- Environmental Impairment (pollution) - covers negligent acts and/or omissions by the individual or organization resulting in damage to the environment.
- Equipment Floater - covers equipment that moves from location to location from perils of nature or collision.
- Errors and Omissions - coverage for various professions that require protection of negligent acts and/or omissions resulting in bodily injury, personal injury, and/or property damage liability to a client. Typically architects are required to carry Errors and Omissions.
- Excess Insurance - coverage above the primary amount of insurance coverage.
- Fidelity Bond - coverage that guarantees that the insurance company will pay the insured business for money or other property lost because of dishonest acts of its employees. The bond covers dishonest acts such as larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, or willful misapplication.
- Garage or Garage Keepers Insurance - coverage for injury, property damage or destruction for which the insured garage or its representative become legally liable resulting from the operation of the garage.
- General Liability - coverage for an insured when negligent acts and/or omissions result in bodily injury and/or property damage when someone is injured as the result of using the product manufactured or distributed by a business or when someone is injured in the general operations of a business.
- Liquor Liability - legislation that makes an establishment or individual selling liquor responsible for injuries caused by its customers to a third party.
- Professional Liability Insurance - coverage for specialists in various professional fields that work with the general public and have greater than average expertise in particular areas, for example lawyers, surgeons, druggists, and insurance agents.
- Property Insurance - indemnifies an insured whose property is stolen, damaged or destroyed by a covered peril.