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State Procurement Manual Homepage
State Procurement Manual

Certificates of Insurance

Number Section
PRO-D-34 General Policies
Effective Replaces Agencies Affected
3-1-97 8-1-96 All


Authority: Wis. Stats. 16.705(2); 16.72(2); 16.865(5)

Scope:
  • to establish policy and procedures for certificates of insurance
Definitions:

  1. "Certificate of insurance" means a document issued by an insurer which evidences that an insurance policy exists and provides information such as: insurer, insurance agency, insured, type(s) of insurance, policy number(s), effective date(s), expiration date(s), limits, certificate holder, cancellation procedure, and the name of the representative who authorized the policy.

  2. "Commodity or standard service procurement" means a contract or procurement which is not a high risk service procurement."

  3. "High risk service procurement" means a contract or procurement that significantly increases the possibility of loss or exposure to loss to the State of Wisconsin, its agencies, employees, agents or officers from a third party.

  4. "Risk" means the potential for property loss, for physical harm, or legal liability.
Content:

  1. Need for certificate of insurance: When the state contracts with a vendor, that vendor’s services provided bring an inherent liability risk, or cost of defense, to the State of Wisconsin. By obtaining an appropriate certificate of insurance and maintaining a current certificate of insurance on file, for a high risk procurement, the state has evidence that insurance has been obtained that transfers risks associated with the business relationship with the vendor from the state to the insurer.

  2. Commodity or standard service procurement: The agency will require that the vendor have insurance coverage of at least the "minimum standard insurance limits," but the agency need not obtain a copy of the vendor’s "certificate of insurance."

  3. High risk service procurement: The agency will require that the vendor have insurance coverage in accordance with the "insurance limits for high risk services" and will obtain a certificate of insurance from the vendor, prior to the start of the contract.
Procedures:

  1. Commodity and standard service procurement

    1. The agency specifies the "standard insurance limits," as stated in Appendix A (Word 6.0), in the request for bid/proposal, and resulting contracts regardless of the value of the contract or the type of procurement. Including the Standard Terms and Conditions (form DOA-3054, Revised 8/96 or later) (Word 6.0) described in PRO-E-7 will satisfy this requirement. Standard Terms and Conditions are available by submitting a Forms Order (DOA-3331) to Document Sales: INTER-DEPARTMENTAL MAIL, 202 S. Thornton Ave.; or FIRST CLASS MAIL: P.O. Box 7840, Madison, Wisconsin 53707-7840; or fax 608/267-6933.

      In the absence of a request for bid/proposal, as in the case of a waiver of bidding, the agency specifies the insurance requirements on the back of the purchase order or in the contract.

    2. The "standard insurance limits" are minimum limits of coverage. The agency may establish its own policy regarding minimum limits for an individual procurement or for all procurements, if the agency’s risk manager approves.

    3. The request for bid/proposal will require issuance of the vendor’s insurance policy with a minimum sixty (60) day cancellation notice, by an insurance company licensed to do business in the State of Wisconsin, with a minimum AM Best rating of A-, and the signature of an authorized agent.

    4. Workers compensation is required in accordance with statutory requirements for commodity and standard service procurements.

    5. If a commodity purchase requires installation of heavy equipment, the agency’s risk manager will review the procurement prior to requesting bids/proposals to establish any insurance limits.

    6. The agency need not obtain a copy of the vendor’s certificate of insurance. However, in administering the contract, the agency should remind the vendor of the need for the specified insurance coverage at the time of initial contracting and when extending any contract.

  2. High risk service procurement

    1. The agency specifies the "insurance limits," for the type of service that the agency is purchasing as a part of the request for bid/proposal regardless of the value of the contract or the method of procurement.

      1. If the service is one of those identified below, then the agency specifies the "insurance limits" as stated in Appendix A (Word 6.0):

        Air Charter
        Ambulance Service
        Asbestos Abatement
        Building Remodeling and Construction
        Elevator Maintenance
        Medical Services, including Optical and Laboratory
        Recreational Services
        Refuse Transportation and Disposal
        Transportation

      2. The agency may specify higher limits for a particular procurement for one of the services listed above, if such limits are approved by the agency’s risk manager.

      3. If an agency identifies other high risk services, not listed above, the agency will specify insurance limits as approved by the agency’s risk manager.

    2. The requirement for workers compensation insurance applies to every contract, even if the vendor has fewer than three (3) employees. The state may require such coverage although the number of employees is fewer than that for which workers compensation insurance generally is required by Wisconsin Statutes.

    3. The agency obtains a certificate of insurance from the vendor prior to the commencement of the contract for services and prior to any extension of a contract.

      1. In its request for bid/proposal, the agency identifies the:

        1. Agency’s name and the name, title, and complete mailing address (P.O. Box, office building or floor for delivery, ZIP code, etc.) of the individual to whom the vendor must send the certificate of insurance; and

        2. Time period during which the agency must receive the certificate of insurance.

      2. If the vendor fails to provide the agency with a certificate of insurance, consistent with the contract requirements, the agency will make another contract award.

  3. Requirements of a completed certificate of insurance, when one is required

    1. Submittal of certificate of insurance: The vendor must provide a copy of the certificate of insurance prior to the commencement of the contract to the individual designated in the request for bid/proposal. A fax copy is acceptable. (See Page 2A, Sample Certificate of Insurance.)

    2. Review of certificate of insurance. (See Page 2A for a sample.) The agency reviews the certificate to ensure that the following information is provided:

      1. Identifying information: Specifies the name of the insured, the name and the address of the insurance agency, the type(s) of insurance, the policy number(s), the effective date(s), the expiration date(s), name and address of the certificate holder, and the signature of the representative authorizing the policy.

      2. Additional insured: Names the State of Wisconsin, its officers, employees, and agents, as an additional insured.

      3. Coverage: Specifies at least the limits of insurance coverage required for the procurement.

      4. Cancellation notice: Provides for a minimum of a sixty (60) day cancellation notice to the agency for whom the vendor is providing the service.

    3. Verification of other information: The agency also will verify the following additional information:

      1. Business in Wisconsin: Ensures that the insurance provider is authorized to do business in the State of Wisconsin by the Wisconsin Office of the Commissioner of Insurance by calling the Commissioner’s Bureau of Financial Examinations, 608/267-9456.

      2. A.M. Best Rating: Ensures that the insurance provider has an A.M. Best rating of A- or better by calling the Wisconsin Office of the Commissioner of Insurance, Bureau of Financial Examinations, 608/267-9456.

    4. Self-insured: If the vendor is self-insured, the vendor must provide financial records that demonstrate financial ability to cover losses up to the limits of the required insurance that are acceptable to the agency’s risk manager.

  4. Miscellaneous: Some procurements have varying insurance requirements. An agency having insurance questions about procurement situations noted below should contact its agency risk manager or the State Property and Liability Manager, State Bureau of Risk Management, 608/266-0168.

    1. Temporary help services: Liability for property and personal injury insurance normally remains with the vendor. However, the state may accept the risk, if the agency’s risk manager approves.

    2. State procurement statewide contract: When an agency makes a purchase through a state procurement statewide contract issued by the State Bureau of Procurement, the Bureau will have obtained any required certificate of insurance.

    3. Piggyback contract: When an agency makes a purchase through a contract established by another agency, as described in PRO-D-29, Piggybacking, the agency that originally developed and established the contract is responsible for obtaining any required certificate of insurance. The agency that is piggybacking may request copies of the certificate of insurance from the original contracting agency. The piggybacking agency is responsible for obtaining any certificate of insurance to meet its own special insurance needs as identified in sections II. A. 2) and 3) above.

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