Number IPP 12

Dated: 01/11/10
Replaces: 2/7/05

Internal Policy and Procedures

INSURANCE: (High risk, Transportation Liability, Loaner Equipment, High Value Orders)


I. Additional insurance may be required before certain events or transactions can occur.

There are four elements addressed in the policy sections that follow:

  • “High Risk” activities where the University requires the vendor to submit an insurance certificate.

  • “Transit liability” (shipping or receiving of goods): When the University owns, or has accepted title to goods that are in transit to or from the University.

  • “Items (typically equipment) on lease, loan, or evaluation” to the University from another legal entity.

  • "Replacement Value" occasions where the replacement value of an item shipped far exceeds the value the University actually paid for the item.

Section 1-High Risk:

The University’s office of Risk Management has defined certain activities as “high risk” which requires the vendor/provider to provide evidence of increased or special insurance coverage to the University.

For transactions pertaining to these high risk activities (defined below), the agent is required to get an acceptable insurance certificate (IC) addressing the high risk activities before issuing a purchase order to the vendor who will be engaging in such activities on university owned, leased, or otherwise controlled land as well as some research locations, or on privately owned property that the owner has allowed the University to use.

An insurance certificate (IC) is a document provided by the insurance company of the vendor which states the type, level, and term of coverage they are providing to the named vendor/service provider.

The following activities are defined as high risk, and as such require additional insurance limits in advance of any contract or order:

  • Airplane charter services
  • Ambulance service
  • Child care
  • Asbestos abatement contractors
  • Building & grounds (facility and grounds upkeep related)
  • Maintenance/Service (service, maintenance, repairs, or improvements to UW controlled assets.) Some interpretation may be required
  • Remodeling (smaller scale events of any kind that affect a building)
  • Construction (larger scale construction projects)
  • Elevator maintenance
  • Manual food services (catering)
  • Medical services (including optical & laboratory)
  • Recreational services
  • Transportation services (of people)
  • Travel services (tours, agencies)
  • Hazardous waste services (contact Risk Management)
  • Other HIGH RISK services to be evaluated on a case-by-case basis

Please review the high risk liability coverage matrix, PPP4 and IPP26 for more detailed information about each bulleted item.

As stated in point 22.0 of the University of Wisconsin-Madison Standard Terms and Conditions, vendors may be required to provide proof of insurance for worker compensation, general liability, and comprehensive auto liability (owned and non-owned). The coverage related to these liabilities should be documented on the insurance certificate document that is submitted by the vendors insurer.

Upon receipt of a requisition, the agent must determine if additional insurance is required based on the high risk activity defined above, by consulting with UW Risk Management or the attached liability matrix.

Prior to issuance of any Purchase Order (PO), contract award letter, and/or an Invitation to Submit Plan (ISP), the agent will determine if the successful vendor has a valid IC on file with UW Risk Management with the coverage limits required for the specific high risk activity. The process for checking the status is outlined below; please see “Using the web based Oracle UW Risk Management Insurance Certificate Database” (Upon entering this page, click on the link to "Certificates of Insurance and follow the prompts).

If a current and valid IC is not on file, agent must contact the vendor, acquire an appropriate IC and submit it to UW Risk Management using the attached memo to Risk Management. Risk Management will then review, approve, or deny the validity of the IC within 48 hours. Agent may edit and use the attached template letters to request an IC from a vendor:

If an IC is denied, the agent must work with UW Risk Management and the vendor to establish a valid IC before and order can be released.

When preparing a bid, RFP, waiver, or ISP, agent must include appropriate high-risk insurance requirements in bid Special Conditions of Bid under "Vendor Qualifications".

If the agent is using an established contract issued by the Department of Administration, or the UW System it is automatically assumed that the insurance requirements will have already been met.

Section 2 Shipping or Receiving Goods Liability (Transit Exposure):

“Transit Exposure ”: The various risks related to total (or partial) loss of the value of goods shipped due to freight damage, loss, or other peril.

Insurance coverage is the responsibility of the university for goods purchased from a vendor when title passes to the university upon shipment (i.e. FOB Shipping Point). (See FOB Matrix).

“FOB”: Stands for “Free on board”, which when followed by either “destination” or “shipping point” define when and where the University takes legal ownership of goods shipped. I.E. items ordered “FOB Destination” means the University does not legally take ownership of the goods until it arrives at our stated destination. Any damage that occurs to the goods along the way is not a risk for the University. FOB Shipping point is the opposite; the University has the risk exposure for the entire journey from the vendors dock to our site.

  • Prior to ordering inbound items from domestic suppliers FOB Shipping Point in excess of $50,000 Risk Management must be contacted so the items can be properly insured.
  • Prior to ordering inbound items from foreign suppliers (importing) FOB Shipping Point for any dollar amount greater than $1,000.00 (our deductible), Risk Management must be contacted so the items can be properly insured.

Regardless of the dollar amount involved, insurance coverage is the responsibility of the university for university owned goods shipped from the university to another business entity, unless that entity takes title (ownership) immediately upon shipment from the university.

  • Prior to shipping items domestically in excess of $50,000, State Risk Management must be contacted so the items can be properly insured.
  • Prior to shipping an item abroad (exporting) valued in excess of $1,000.00 (our deductible); Risk Management must be contacted so the items can be properly insured.

Section 3 Items on lease, loan, or evaluation.

Insurance coverage for equipment offered to the University on an evaluation/trial or loaner basis is normally provided by the vendor. This should be confirmed in writing prior to accepting the item. The University may accept the risk in certain instances as approved in advance by Risk Management.

When contracting a lease-to-purchase transaction, the agent must determine from the lease agreement where the liability for property insurance lies, with the titleholder or with the University. If it lies with the University, then special insurance arrangements need to be made through Risk Management.

If the agent receives a requisition or other notice for trial, evaluation, or loaner equipment purposes, the agent will contact the department to see if an evaluation letter was sent informing the vendor of our understanding that the owner is responsible for insuring the equipment as per IPP30 .

This letter should also state that purchasing rules must be followed prior to issuance of an official purchase order for the purchase.

If the vendor insists there is a "contractual obligation" or the department and vendor have agreed the University will accept the insurance risk, the department must submit a special request for insurance coverage to Risk Management prior to receiving the goods by contacting Risk Management.

Section #4 Replacement Value Discrepancies:

A replacement value discrepancy exists when there is a large difference between the estimated replacement value of an item and the actual value paid by the University. When this situation occurs, the agent should contact Risk Management in advance of shipment to consider special insurance arrangements.

Using the Web Based Oracle Risk Management Insurance Certificate Database:

Go to the link(s) listed below and follow the instructions provided to check the status of a vendor’s insurance certificate on the Risk Management database.

Link to the Risk Management Insurance Certificate Database (click on the words “Certificate of Insurance” in the page title:

  Maintaining current insurance certificates:

  • All Certificates of Insurance are to be sent to the University of Wisconsin-Madison, Department of Risk Management, 21 N Park St, Madison WI 53715 1218. Please use the template cover sheet when forwarding IC’s via fax.
  • UW Risk Management will send one renewal notice on the first of the month to vendors whose existing certificates expire in the next month. After this initial contact the responsibility for acquiring a valid IC falls to the agent, who must pursue the vendor for a current IC prior to releasing an order after the certificate expiration date.
  • A report tool is available to agents through the Oracle Purchasing System Reports so they can run a listing every month of vendors whose insurance certificate will expire in the following month.
  • Agent will send letter (see links to template letters above) if vendor must resubmit an insurance certificate.

Note of Caution:

I There are times when agents may become involved in contract negotiations that can affect the University's ability to legally pursue a vendor for their actions. Agents should be especially concerned with contracts containing "waiver of subrogation" language. If you agree to accept a waiver of subrogation, in effect what you have done is limited the ability of the University to go after a vendor for their negligence. Thus, the request for insurance coverage is null and void, as we've agreed to waive their responsibility for their actions.

Delegated Departments: Delegated departments are responsible for ensuring that insurance certificates are on file prior to issuing PO-Ready requisitions to Purchasing Services and appropriately requesting coverage for goods as noted in items above.


UW Standard Terms & Conditions, point # 22
Special request for insurance coverage form & instructions
Standard Terms and Conditions Pro-404
FOB Shipping and freight terms
Catering policy
UW Safety Dept
PRO-607 Risk Management Considerations in Procurement: Insurance, Bonds and Sureties
IPP26 Special approvals
PPP4 Special approvals
IPP #30 (Evaluation, Trial or Loaner Equipment)
Workers Comp. Release of Liability form