I. Purpose
The purpose of this section is to explain the necessity of and the procedures for the annual update of property values by each UW institution and by UW System.
II. Background
For a variety of reasons, asset management is a key function of the risk management offices throughout the UW System. Property control through the use of valid inventory systems is a major goal of all the institutions. Two vital risk management applications for both facility and contents are accurate claims settlement and equitable computation and allocation of property premiums.
Content inventory is defined by System Risk Management (SRM) as all Capital Equipment, Non-capital Equipment and Supplies. Each institution is responsible for maintaining a current capital inventory system. SRM requests inventory data annually in order to update System records and develop a premium allocation schematic.
Currently a master facility list is maintained on a PC-based database by SRM. Division of State Facilities (DSF) maintains a list of university owned facilities. Updates to the master facility list are input into the database periodically by SRM and annually through a data disk download from DSF.
III. Valuation Procedures
Annually, each institution is required to complete the necessary property valuation forms as follows.
A. Facility/Content Worksheet
This worksheet, which is generated by System Risk Management, shows the projected Replacement and Cost Values of facilities as of July 1. Please review the list of facilities and their values with your Campus Planner to ensure the reports accuracy.
B. Content Values
Beginning values are determined by using a rate unique to the building occupancy times the gross square footage of the facility. Keep in mind, this factor does not include library books, movable equipment, or farm values. Remember – library books are to be added back into the base library content figures. Library book figures are to come from the library directors who may use the Bowker Index to arrive at their book values.
Values shown on the Facility/Content Worksheet are not to be included in Section II of the Inventory Valuation Summary Worksheet, as this would duplicate the numbers, resulting in higher premiums. Only movable equipment is to be shown in Section II of the form. Movable is defined as equipment that would leave its home building on a regular basis. Library books are to be included in the value of the library contents, not movable equipment.
IV. Inventory Valuation Summary
1. Vehicles
Collision and comprehensive coverage for automobiles is required and it must be purchased for all vehicles. An itemized list must be maintained by the institution and is subject to audit. The values reported are the original acquisition costs. Vehicles are only insured for their actual cash value.
2. Movable Equipment/Inland
The moveable equipment/inland tables show a stated value in place of your boats and accessories, musical instruments, photography equipment and portable computers and accessories. This value is to be used by the institution for those categories unless there is justification why the number should be less. Then an explanation must be given to SRM and upon their approval the number may be lowered. In addition, values may be increased without input from SRM.
The coverage provided for movable equipment and contents is replacement cost. Farm equipment and vehicles are covered for actual cash value. Movable is defined as equipment that would leave its home building on a regular basis.
a. Art Exhibits on/off the Premises
The reported value is to reflect the total value of all exhibits that may be at your institution at any one time, taking into consideration the time prior to and after the actual exhibit period. In addition, the institution is to list the total value of all exhibits held during the year. Remember, transit to the institution may not be covered; coverage may be afforded if the institution Risk Manager is contacted and agrees to cover the exposure. If we are responsible for insuring exhibits that are coming to or leaving campus and are worth more than $50,000 in any one shipment, transit coverage MUST be discussed with SRM prior to the shipment.
b. Transportation Coverage
The institution’s Risk Manager must be notified of any shipment of $50,000 or more as this needs to be reported annually to SRM for determining premium charges. Shipments worth $50,000 or more must be discussed with SRM. A value is to be reported to reflect the total value of all parcels that may be in shipment at any one time. Keep in mind the value of scientific instruments, computers and other items being shipped to the manufacturer for repairs may require us to insure them during shipment. Include total institution shipments for the year.
c. Borrowed/Loaned Equipment
This category is meant primarily for those items that manufacturers and/or vendors make available for our use, often at no charge. Attempts should be made to keep the manufacturer/vendor responsible for the unit, but if this is not possible, it can be covered under this category. At a minimum, $250,000 should be shown. (If the institution borrows equipment worth more than $250,000, its anticipated value should be shown.) In addition, the institution is to list the total values of all borrowed/loaned equipment used during the year.
In general, the State Self-Funded Property Program is intended to provide coverage on State-owned property. However, there are situations where personal property of faculty and staff may be considered “on loan” to the institution.
The owners have the primary responsibility to insure their equipment. However, if evidence is furnished that indicates the insurance was not available, the State Self-Funded Property Program may provide coverage provided the following are met:
1. At the time of the loss it must be shown that the borrowed item was not insured by other insurance.
2. The personal property must be used on University business during the time period for which coverage is requested.
3. Itemized listing of the personal property must be on file in the Institutions risk management office.
4. The personal property will be insured for a limited period of time and/or for a specific project or need. This time period must be specified in writing prior to acceptance by the institution agreeing to cover the item(s).
5. The availability of the personal property definitely benefits the department by providing equipment that is truly needed and that the institution would be required to otherwise purchase from other resources.
6. The personal property will be subject to our standard deductibles.
7. The maximum coverage on any one item is $50,000.
8. Values to be summarized and reported to SRM annually and itemized listings are subject to audit.
9. Coverage is subject to the State Self-funded Property Program exclusions.
d. Farm Coverage
Farm equipment is covered for actual cash value (ACV) and should therefore be reported at its ACV on the Farm Property Worksheet. Livestock is divided into Class I (Livestock) and Class II (Registered Livestock). The lower-valued (Class I) livestock should be grouped together under the various classes as shown in the worksheet. Dollar limits per animal should be inserted to reflect the current value per head. Registered (Class II) livestock should be identified on a separate list by the registration number and individual value. This list is to be maintained on campus and is subject to audit.
The premium charged for the grain and hay will be based on the average value expected to be in the facility during the course of the year. If you wish to insure hay, straw, or fodder in the open, it can be insured for fire coverage only, provided it is in stacks or bales. The maximum coverage for any one stack should be established by the institution.
3. Business Interruption and Extra Expense
Institutions are subject to business interruption losses. Business interruption is normally written on those activities and structures that are profit producing, such as athletic events, residence halls, university centers, bookstores, etc. Unless requested not to, we will automatically include this coverage on the boiler and machinery policy if the institution so elects it.
Extra Expense coverage is currently afforded in our program. Extra Expense is defined as the expediting costs incurred during the period of restoration over and above the normal restoration cost.