Revised 01/04/02
20.1.0

A. ELEMENTS   

There are three (3) basic elements of either incoming or outgoing risk transfer which must be a part of the administration of the risk management program for any organization.

These elements are:

1.   Contracts and accompanying Hold Harmless provisions, Indemnity, and Liability provisions.

2.   Insurance, if any, which funds these provisions or which is required by the contract.

3.  Certificates of insurance or other evidence that verify the existence of any insurance.

B. USE OF CONTRACTS   

1.  Risk which cannot be assumed must either be avoided or transferred through the use of contractual provisions, to other parties. The formal transfer of risks through contracts is an essential element of risk management.

2.  When the District transfers a risk through a non-insurance contract, it must ensure that the transferee purchases the necessary insurance protection or that the transferee is financially capable of responding to the loss without insurance protection. It must be realized that the Indemnity (insurance) Agreement is only as good as the ability of the indemnitor to perform.

3.  If the transferee cannot respond to a loss through insurance or other means, then the loss will likely have to be borne by the transferrer, i.e., the District.

C. VENDOR INSURANCE REQUIREMENTS   

1. Certificates of Insurance    

a.   Independent contractors providing services to the DCCCD are required to show proof of insurance. As a minimum, they are required to sign a contract holding the District harmless for any liability arising out of their activities in providing such services to District students.

b.  Where practical, a policy of obtaining insurance certificates should be adhered to and a standard certificate form should be required detailing all applicable coverage and limits. A facsimile of the certificate is acceptable for proof of insurance. Final documentation of the contract requires an original copy of the certificate.

2.  Proof of Self Insurance

a.  Self insurance will be allowed in certain circumstances where the vendor meets the following requirements:

1) a minimum of five (5) years in business

2) assets must be greater than the value of the contract

3) the ratio of assets to liabilities exceeds 1.0

4) losses for the last five years have been minimal

b.  The vendor must supply five (5) years of audited financial statements to the DCCCD. These will be reviewed by the District Purchasing Department to ascertain the stability of the vendor.

3. Bonds

In accordance with Article 5160 of Vernon's Revised Texas Civil Statutes, as amended by House Bill 31, performance and payment bonds will be required on all public works contracts as described below. Public works contracts are contracts for the construction, alteration, or repair of any public structure, road, highway, or other real public property.

a.  A Performance bond will be required for any public works contract in excess of $100,000. The bond shall be executed in the amount of the contract to cover the cost of having the work completed if the contractor defaults.

b.  A Payment bond will be required on all projects in excess of $25,000. The bond shall be executed in the amount of the contract, to cover the cost of labor and materials if the contractor defaults.

D. INSURANCE REQUIREMENT   

A Certificate of Insurance evidencing appropriate levels of coverage is required from the vendors with the performance of the contract. The type of services provided and the associated risks, determine the appropriate level of insurance. The bid or Request for Proposal (RFP) will define vendor insurance requirements