RISK MANAGEMENT

Welcome to the YCPARMIA Risk Management page.

This is where we will provide guidance and training primers on the Risk Management issues that our members face. There are regular additions to the information available here. If you are a new supervisor or manager, or simply new to risk management, we recommended beginning with the primers below. E-mail Jeff Tonks ( ) with any contracts, claims, or risk transfer questions.

 




What Every YCPARMIA Supervisor Should Know:


This training deals with a significant number of subjects in a very broad manner. Generalizations are made for the sake of keeping the presentations relatively short; exceptions and clarifications are kept to a minimum. The main goal is to develop issue recognition rather than in-depth knowledge. If more information is needed on a particular matter please contact YCPARMIA.



  1. Intro for New Managers and Supervisors
  2. What Is Risk Management?
  3. Risk Financing
  4. What Is YCPARMIA?
  5. Risk Identification
  6. Risk Tolerance


  7. Auto Liability
  8. Auto Liability: Entity v. Employee Owned Vehicles
  9. Auto Liability: Physical Damage to Vehicles
  10. Auto Coverage Limits
  11. Auto: Frequency Breeds Severity
  12. Suspended or Revoked Drivers Licenses
  13. Subrogation
  14. Do Not Admit Fault
  15. Auto Damages


  16. Intro to Workers' Compensation
  17. Workers' Comp: Claim Frequency
  18. Workers' Comp: Initial Forms - DWC 1
  19. Workers' Comp: Initial Forms - 5020
  20. Workers' Comp: What Is A TPA?
  21. Workers' Comp: Investigations
  22. Workers' Comp: AOE/COE
  23. Workers' Comp: Good Faith Personnel Action
  24. Workers' Comp: Psychiatric Injuries
  25. Workers' Comp: Five Misconceptions
  26. Workers' Comp: Injury
  27. Workers' Comp: "Documentation-Information Only"
  28. Workers' Comp: Benefits
  29. Workers' Comp: Death Benefits
  30. Workers' Comp: Vocational Rehab
  31. Workers' Comp: Permanent Disability
  32. Workers' Comp: Permanent Disability - Dollars
  33. Workers' Comp: Permanent Disability - Apportionment
  34. Workers' Comp: Intro to Temporary Disability
  35. Workers' Comp: Temporary Disability - Dollars
  36. Workers' Comp: Temporary Disability - Accomodating Restrictions See also #176
  37. Workers' Comp: Temporary Disability - Supervising Modified Work
  38. Workers' Comp: Temporary Disability - Malingering
  39. Workers' Comp: Medical Benefits
  40. Workers' Comp: Controlling Medical Treatment
  41. Workers' Comp: Pre-designation
  42. Workers' Comp: Utilization Review
  43. Workers' Comp: Dispute Resolution
  44. Workers' Comp: Penalties, 132a Serious & Willful
  45. Workers' Comp: Lawyers
  46. Workers' Comp: Concluding the Claim


  47. Government Code: Claim Procedures
  48. Government Code: Claim Requirements
  49. Government Code: Time Limits, Rejections & Exceptions
  50. Government Code: Lawsuits


  51. Liability: Duty to Defend & Indemnify
  52. Liability: YCPARMIA Liability Coverage
  53. Liability: Where Does Public Liability Come From
  54. Liability: Dangerous Condition of Public Property
  55. Liability: Dangerous Condition - Definition
  56. Liability: Dangerous Condition - Proximate Cause & Forseeability
  57. Liability: Dangerous Condition - Notice
  58. Liability: Dangerous Condition - Defenses and Immunities
  59. Liability: Dangerous Condition - Sidewalk Claims
  60. Liability: Dangerous Condition - Trees
  61. Liability: Dangerous Condition - Road Conditions
  62. Liability: Dangerous Condition - Comparitive Negligence
  63. Liability: Dangerous Condition - Deep Pockets / Joint & Several Liability
  64. Liability: Dangerous Condition - Reasonable Defense
  65. Liability: Dangerous Condition - Subsequent Repairs


  66. Employment Liability Introduction
  67. Employment Liability: DFEH/EEOC
  68. Employment Liability: Employment Discrimination
  69. Employment Liability: Discriminatory Motive
  70. Employment Liability: Hostile Work Environment
  71. Employment Liability: Who Can Be Held Liable?
  72. Employment Liability: Retaliation
  73. Employment Liability: Time Frames - How Long Are You Exposed?
  74. Employment Liability: The Ostrich Defense & Other Axioms
  75. Employment Liability: Sexual Harrassment
  76. Employment Liability: Disability Discrimination
  77. Employment Liability: Workers' Comp & the ADA - The Interative Process
  78. Employment Liability: Damages


  79. Civil Litigation: Primer
  80. Civil Litigation: The Supervisor's Involvement in Discovery
  81. Civil Litigation: Concluding a Claim
  82. Civil Litigation: Attorneys


  83. Law Enforcement Liability: 1983
  84. Law Enforcement Liability: Exposures
  85. Law Enforcement Liability: 1988 Attorney Fees


  86. Liability Coverage Intro
  87. Liability Coverage: Anatomy of an Insurance Policy
  88. Liability Coverage: Declarations and Insuring Agreement
  89. Liability Coverage: Definitions
  90. Liability Coverage: Exclusions
  91. Liability Coverage: Conditions
  92. Liability Coverage: Excess Coverage
  93. Liability Coverage: Sub-limits


  94. Contract Risk Transfer
  95. Contract Risk Transfer: The Indemnification Clause
  96. Contract Risk Transfer: Insurance Requirements & Contract Risk Transfer
  97. Contract Risk Transfer: Insurance Limit Complaints
  98. Contract Risk Transfer: Insurance Limits - How Much?
  99. Contract Risk Transfer: Insurance Limits - Contract Value
  100. Contract Risk Transfer: Insurance Limits - Aggregates Can Be Bad
  101. Contract Risk Transfer: Insurance Limits - Deductibles, Retentions and Self-insurance
  102. Contract Risk Transfer: Insurance Limits - Rating an Insurance Carrier
  103. Contract Risk Transfer: Insurance Limits - Occurance vs. Claims-made Policies
  104. Contract Risk Transfer: Insurance Limits - Coverage Types
  105. Contract Risk Transfer: Additional Insured - Why?
  106. Contract Risk Transfer: Additional Insured - Scope of Endorsement
  107. Contract Risk Transfer: Proof of Insurance
  108. Contract Risk Transfer: Proof of Insurance - ACCORD Form & Endorsements
  109. Contract Risk Transfer: Proof of Insurance - Cancellation & Non-Compliance
  110. Contract Risk Transfer: Proof of Insurance - Tendering a Claim/ Suit
  111. Contract Risk Transfer: Waviers


  112. Fidelity Intro
  113. Fidelity: Coverages


  114. Property Intro
  115. Property: Coverages
  116. Property: Replacement vs Actual Cash Value - AND - Shared Limits
  117. Property: Valuations
  118. Property: Auto Physical Damage
  119. Property: The Adjustment Process


  120. Safety and Loss Prevention
  121. Safety: The Two OSHA's
  122. Safety: Cal/OSHA Inspection
  123. Safety: Cal/OSHA Citations/Penalties
  124. Safety: Cal/OSHA Appeals Process
  125. Safety: IIPP Intro (Injury Illness & Prevention Program)
  126. Safety: IIPP - Intro continued
  127. Safety: IIPP - Management Committment
  128. Safety: IIPP - Communications
  129. Safety: IIPP - Safety Committee
  130. Safety: IIPP - Safety Committee Continued
  131. Safety: IIPP - Documentation of Compliance
  132. Safety: IIPP - Safety Inspections
  133. Safety: IIPP - Investigating Accidents
  134. Safety: IIPP - Investigating Accidents - Prevention
  135. Safety: IIPP - Other Policies
  136. Safety: Emergency Action Plan
  137. Safety: Size vs. Exposure
  138. Safety: Heat Illness Protection
  139. Safety: Lockout/Tagout
  140. Safety: Confined Space
  141. Safety: Confined Space - Entry Permits
  142. Safety: Ergonomics
  143. Safety: Ergonomics Repetitive Motion Injuries
  144. Safety: Ergonomic Engineering/Evaluations
  145. Safety: Ergonomic Risk Factors
  146. Safety: Noise Control
  147. Safety: Reporting Serious Injuries to Cal/OSHA
  148. Safety: Respiratory Protection
  149. Safety: Aerosol Transmissible Diseases
  150. Safety: Hazardous Materials
  151. Safety: Violence in the Workplace
  152. Safety: Violence Model Policy Elements
  153. Safety: Violence and the Ostrich Approach
  154. Safety: Portable Fire Extinguishers
  155. Safety: Tying it All Together
  156. Safety: Roadblocks & Detours
  157. Safety: Roadblocks & Detours - continued
  158. Safety: Dead-end Inspections
  159. Safety: Accident Investigations
  160. Safety: Inconsistent Safety Committees
  161. Safety: Inconsistent Safety Committees - continued
  162. Safety: Inconsistent Safety Committees - continued
  163. Safety: Inconsistent Safety Committees - continued
  164. Safety: YCPARMIA's Role
  165. Safety: Triggering YCPARMIA's Involvement
  166. Safety: YCPARMIA's Role/Specific Activities
  167. Safety: Reality Check
  168. Safety: YCPARMIA Training
  169. Safety: YCPARMIA Common Services
  170. Safety: Matching Prevention to Injuries
  171. Safety: Matching Prevention to Injuries - continued
  172. Safety: Matching Prevention to Injuries - continued
  173. Safety: Matching Prevention to Injuries - continued
  174. Safety: Matching Prevention to Injuries - Training
  175. Safety: The Costs of Injury


  176. Modified Work is Not Retaliation
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    Safety Advisory Committee Guidelines


    This is a series of educational bulletins to help member agencies form and maintain active safety committees. We are convinced that an active committee, meeting monthly and interacting with upper management is the best and cheapest opportunity for a member to reduce their risk exposures and expenses. YCPARMIA staff is available to assist the committees in any way possible, and would value the opportunity of participating as a consultant at committee meetings.

    The first nine bulletins are intended to address the basic structure of the Safety-Advisory Committee, and should assist in fine tuning existing committees or to start new ones. The latter bulletins focus more on some of the "How To's" like accident investigations, safety inspections, and setting up a task force.

    1. Intro
    2. Committee Goals
    3. Safety Task Force
    4. Committee Positions
    5. Committee Meetings
    6. Position Responsibilities: Committee Leader
    7. Position Responsibilities: Committee Secretary & Training Coordinator
    8. Position Responsibilities: Loss Investigation Coordinator & Inspection Coordinator
    9. Advisory Committee Guidelines and Reminders
    10. Committee Agendas
    11. Choosing Committee Members
    12. YCPARMIA's Role
    13. Cal/OSHA's Requirements & Recommendations
    14. Facility Inspections
    15. Facility Inspections (continued)
    16. Accident Review: Intro
    17. Accident Review: A Visit to the Real World
    18. Accident Investigation: Tips & Forms
    19. Accident Review: Identifying Causes
    20. Accident Review: Identifying Causes (continued)
    21. Accident Review: Most Critical Solution - Intro
    22. Accident Review: Identifying the Most Critical Solution
    23. Getting Started: Summary
    24. Appendix: Accident Investigation Form

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    GOVERNMENT CODE PROCEDURAL PRIMER


    Compliance with the procedural requirements of the Tort Claims Act found in the California Government Code is a condition precedent to most lawsuits against California public entities. They are designed to give the public entity an opportunity to conduct a timely investigation, and appropriately respond to the claimant before litigation is commenced.

    • In most cases, a claimant must file a written, formal, timely claim containing specific information to recover money or damages from a local public entity.
    • Government Code section 815 states, "except as otherwise provided by statute a public entity is not liable for an injury, whether such injury arises out of an act or omission of the public entity or a public employee or any other person."
    • Therefore all California governmental liability is statutory, except as required by the state and federal constitutions.
    • A public employee is liable for any injury caused by his or her act or omission "to the same extent as a private person," except as provided by statute.
    • Included in the statutory exceptions are a number of immunities.
    • GC 825 requires the governmental employer, subject to certain qualifications, to defend and indemnify their employee for acts within the course and scope of employment.
    • There is a statutory requirement, subject again to certain exceptions, that an action for "money or damages" may not be maintained against a public entity, or its' employees, unless a written claim has first been timely presented to the defendant public entity and rejected in whole or in part.
    • There can be a settlement of a loss without a filed claim, but subject to some exceptions, there cannot be a suit without a timely claim and rejection.
    • The facts underlying each cause of action in the suit must have been fairly reflected in a timely claim.
    • The claims requirements apply to claimants who are minors, disabled or incompetent.
    • The doctrine of substantial compliance excuses incomplete claims as long as they give the public entity needed essential information.
    • The public entity's actual knowledge of the facts of the claim does not excuse the claimant from non-compliance with the claim filing requirements.

    Presentation of claim:

    • The claim must be written, but need not be on the local public entity's form.
    • Essential elements of the claim:
    • The names and addresses of the claimants and the person to whom notices are to be sent;
    • A statement of the date, place, and other circumstances of the occurrence or transaction;
    • A description of the indebtedness, obligation, injury, damage or loss incurred as far as they are known when the claim is presented;
    • The name of the public employee who caused the injury, if known;
    • The amount claimed, if less than $10,000, or an indication that it is to be a limited civil case (under $25,000) if over that amount.
    • A claim may be prepared, signed, and presented by a third person acting on the claimant's behalf.
    • The signature of the person presenting the claim authenticates it and assures its truthfulness and reliability.
    • Anyone signing a false or fraudulent claim and presenting it to the public entity is guilty of a misdemeanor or felony.
    • Time Limits — measured from the "date of accrual":
    • Must be submitted within 6 months for death, injury to a person, injury to personal property and damage to growing crops.
    • Must be submitted within 6 months of service of suit when seeking indemnity through a cross-complaint.
    • Must be submitted within 1 year for "any other" cause of action.
    • The "date of accrual" is normally considered the date of injury.
    • Generally the time limits are mandatory, and contain no authorization for tolling or extending the time limits. (See late claims provisions, below)
    • Presentation of the claim is to be made to the clerk, secretary, or auditor of the public entity either in person, or by mailing the claim to one of these people or the governing body at its principal office.
    • The time of notice is based on personal delivery or when the claim or response is placed in the mail.

    Consideration of claim:

    • Notice of Insufficiency: the entity has 20 days to return the claim for a substantial defect; failure to do so waives the defect.
    • Acceptance or Rejection: the entity has 45 days from receipt of claim to reject in whole or in part, or accept in whole, or in part.
    • Public entities are allowed to reconsider rejected claims for the purpose of settlement.
    • Failure of the entity to formally act within 45 days results in the deemed rejection of the claim by operation of law.
    • Written notice, including language specified in the Government Code, of the entity's action is required by personal delivery or mail to the claimant's designated address.
    • Claimant normally is limited to 6 months from the date of rejection to file suit.
    • If the public entity fails to respond with proper written notice, the claimant has two years from the date of accrual to file suit.
    • The public entity can give notice of late claim, and return, within 45 days of receipt, a "6 month claim" that has been submitted after the time limit. Failure to send a timely notice waives the defense of untimeliness.
    • Claimant can then make an application to the public entity for leave to present a late claim within a year of the date of accrual.
    • If denied, the claimant can petition the court for relief from the claims requirements by citing "mistake, inadvertence, surprise or excusable neglect," and a showing that the public entity's defense was not prejudiced by the delay.
    • There is no late claim provision for "1 year claims."
    • Applications for leave to present a late claim must be granted by the entity when:
    • The claimant was a minor during the entire 6-month claims presentation period.
    • The claimant was physically or mentally incapacitated during the entire 6-month period, and that incapacity caused the failure to file a timely claim.
    • The claimant died during the 6-month period.

    Causes of Action Outside the Tort Claim Act:

    • A claimant can bring suit against a public entity without complying with the Government Code claims requirements for certain causes of action, including:
    • Deprivation of state civil rights;
    • Employee discrimination and harassment claims under California law;
    • Inverse condemnation;
    • Actions not strictly for "money or damages" like injunctive relief;
    • Actions brought under federal law.

    Suit:

    • The claimant/plaintiff's civil complaint must allege the presentation and rejection of a claim in all actions to which the claims procedures apply. Failure to plead compliance leaves the pleadings vulnerable to attack.

    Conclusion:

    While the claims requirements can provide a valuable defense to public entity exposures, the greater importance lies in the opportunity it affords to conduct a timely investigation, and to make an appropriate informed decision that hopefully will avoid the conflict and expense of litigation.

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    CONTRACT RISK TRANSFER


     

    Axioms:

    • Each entity should have their own risk philosophy that meets their individual risk tolerance, and that philosophy should be reflected in their required contract provisions.
    • The primary purpose of the contract is not risk transfer, but rather to obtain needed services or goods.
    • The purpose of risk transfer is to have the contractor, rather than the entity, responsible for exposures/losses that might grow out of the contracted service.
    • The potential exposure from each contract must be considered separately, and on occasion may allow for some flexibility in terms.
    • The "cost" of the contract is not necessarily an indicator of potential exposure.
    • The indemnity/hold harmless clause in the contract defines the obligation and scope of the risk transfer accepted by the contractor.
    • The insurance provisions attempt to ensure that there is adequate independent funding available to satisfy the indemnification obligation found in the indemnity/hold harmless clause.
    • The entity's status as an "additional insured" under the contractor's policy creates an indemnity/hold harmless and defense obligation independent of, but generally more limited in scope, than the contractual indemnity clause.
    • The entity's contract specifications/requirements are integrated and designed to work together to obtain the desired results; these specifications are probably not unique to the entity, but are consistent with most public entities in the State.
    • While most contractors cannot redesign their insurance programs to satisfy the unique requirements of each party they contract with, hopefully their broker has obtained coverage that is broad enough to meet the requirements generally found in the type of areas that the contractor conducts business.
    • The waiver or changing of risk transfer provisions after the awarding of a contract could create an exposure to unsuccessful bidders in the form of a lawsuit.

    Indemnity Agreement:

    An indemnity agreement, often called a "hold harmless", is found in the contract.

    • This is completely independent of any insurance coverage.
    • The clause does not relieve the entity of liability, but rather substitutes the contractor's assets in satisfying any liability or defense costs.
    • Classified by the scope of obligation the contract language places on the contractor/indemnitor.
    • Broad = transfers all the risk: not allowed in construction or design.
    • Intermediate = transfers all the risk except for the sole negligence of the entity/indemnitee; strongly preferred.
    • " ... except such loss or damage which was caused by the sole negligence or willful misconduct of the entity."
    • " ... whether or not it is caused in part by a party indemnified hereunder ... "
    • Limited/comparative fault = only to the extent of the contractors fault, but generally gives the entity unapportioned defense costs.
    • Reciprocal = dual clauses where each party agrees to hold the other harmless for their own acts.
    • Hybrid = different levels of protection for different specified risks.
    • In addition to the scope, you need to look at possible limitations on the subject matter of the obligation = "arising from"; "arising out of the project"; "arising out of or resulting from the performance by" "arising out of, incident to, or in connection with the agreement or performance of the work or services hereunder."

    Insurance Types:

    You will usually need:

    • General Liability (premises and negligence),
    • Auto Liability (when vehicles used in any way),
    • Workers' Compensation/Employer's Liability (whenever there is an employee).

    You might need:

    • Professional Liability (Errors and Omissions/Malpractice for professional services),
    • Environmental Impairment Liability (pollution),
    • Fidelity (employee dishonesty) and other coverage's required by the applicable contract or exposures.

    Carriers & Ratings:

    The entity wants to be sure that the insurance company will be financially able to meet its contractual/coverage obligations. The AM Best Company rates insurance carriers on their financial condition (A++ on down) and financial size (XV on down). We generally look for a minimum of "A" (Excellent) "VII" ($50 to $100M in assets).

    (Currently the State Fund is not rated due to fiscal disputes.)

    Forms:

    Most insurance companies use standardized policy forms created by the Insurance Services Office (ISO). Self-insured companies might have manuscript forms with unique language. If there is not an ISO number (ex. CG 10 03 97) you might need to see the policy to determine what is included and excluded from the coverage.

    Occurrence and Claims Made Policies:

    • Occurrence:   The insurance contract covers incidents that occurred during the policy term regardless of when the claim is submitted to the carrier.
    • Claims Made:   Only provides coverage for written claims that are submitted to the carrier during the policy term or during an extended reporting period called a "tail." Generally there is no problem with coverage as long as the policy is renewed each year. If not, the entity should require the purchase of a tail for a specified period.
    • Professional Liability policies are only written on a "claims made" basis.

    Deductibles & Retentions:

    • Deductible: The carrier's responsibilities under the insurance contract start at dollar one; the carrier has the responsibility of getting the deductible payment from their insured.
    • Retention: The carrier's responsibilities do not start until the insured has paid the full amount of the retention. The entity generally reserves the right to review retentions to protect against an insured that might not have the financial ability to trigger coverage by satisfying the retention limit.
    • Limits: Minimum limits should be established not by what should happen, but by what could happen; to establish required limits, each exposure needs to be evaluated looking at all the involved factors in anticipation of the worst scenario. It is better to set the limits too high, than to set them too low.
    • Aggregate Limit: This is the maximum amount that will be paid out on an insurance policy for all claims, from all projects, throughout the entire policy term. The policy limits could be reduced below the required level by payments on other claims that collectively approach or exhaust the aggregate. The aggregate should either be avoided, or set substantially higher than the required limits; an alternative would be requiring a separate policy covering the entity's contract.
    • Primary: The entity needs to ensure that the contractor's policy states that it is primary — that their limits will be exhausted before any contribution from the entity's coverage is made; this may require a separate endorsement.
    • Additional Insured: This is an endorsement that modifies the contractor's insurance policy adding the entity as an insured under their coverage. This status allows the entity to deal directly with the insurance carrier without going through the contractor/named insured, and can create additional duties by the carrier running to, and for the benefit of the entity. The new ISO form endorsements end coverage when the contractor's work is completed even though the exposure for the work might continue. An entity cannot be named as an additional insured on a Workers' Compensation policy, or an Errors and Omissions/Professional Liability/Malpractice policy.
    • Certificate of Insurance: Has the limited purpose to state that the described insurance existed for that brief moment of time when the certificate was issued. The certificate states it is for "information only" and confers "no rights," nor does it "amend, extend or alter" the coverage. The Certificate is probably adequate proof of insurance if it includes endorsed copies of any coverage endorsements (especially the additional insured endorsement), and promises adequate notice of cancellation.
    • Notice of Cancellation: The entity usually asks for sufficient notice of cancellation of the contractor's insurance to allow the entity to take steps to maintain protection against potential exposures. Carriers, in their Certificates of Insurance, state that they will "endeavor" to mail notice, but try to avoid promising notice that could create an exposure for them should they fail to comply. The compromise position seems to be 30 days notice for cancellation, but only 10 days notice if it was for failure to pay the premium.
    • Waiver of Subrogation: Endorses the contractor's policy to cut off any right of recovery for the contractor or carrier when the entity caused or contributed to the injury or damage.

    Conclusion — Deviations from the entity's standard risk transfer requirements
    should be the exception rather than the rule.

    Additional information on risk transfer can be found in Section "J" of the YCPARMIA "Blue Binder."

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RISK MANAGEMENT FORMS




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