Insurance-Related Issues
Accidents in University Vehicles: Regulations and Coverage
Central Management Services (CMS), the University's auto liability insurance carrier, is taking a more aggressive position toward the adjustment of auto liability claims. Beginning in FY96, CMS has denied claims for general auto liability that are not received in seven (7) calendar days. Failure to meet CMS's seven day deadline may result in the driver of the vehicle or the driver's department being charged for the loss.
Another area where CMS is tightening coverage involves the use of a vehicle at the time of the accident. Even though the University vehicle may have been checked out for "state business," insurance coverage is not in force for a side trip to the store, home, bank, etc. If an accident occurs while a University vehicle is being used for such a side trip, the driver will be held responsible for liability as well as physical damage.
There are two categories of coverage under the State of Illinois auto liability plan:
- For liability arising out of the use of a state-owned vehicle, the coverage is primary (pays first).
- For liability arising out of the business use of a vehicle that is not state-owned, the coverage is excess (pays after other available insurance pays).
In either case, coverage is available only if the vehicle is used in the performance of "state business." There may be situations that arise where a claim may be denied because the driver is not on "state business," although he may be considered to be on "University business." Although there is a fine line between "state" and "University" business, situations do occur when a driver is on "University" but not "state" business. These situations mainly involve student activities. In Urbana, excess commercial insurance has been purchased for several motor pool vehicles for these occasions, and if the use of vehicle may not be defined as "state business," a driver should make sure he or she uses one of the commercially-insured vehicles.
Vehicles which are not state-owned fall into two groups: personal vehicles and rental vehicles. For personal vehicles, primary coverage would, of course, come from the driver's own auto insurance policy with excess coverage possibly coming from the state plan when vehicles are used in the course of "state business."
For a rental vehicle, the state policy is also excess with respect to liability. The liability coverage provided by the rental agreement pays first, with the state coverage second, and driver's auto policy third, if such policy covers rentals used on business. Although the coverage provided by the rental company covers personal use of the vehicle, the state plan does not. The state coverage does takes into account that certain deviations from the most direct route are necessary to obtain meals, gas, and hotels. However, side trips to the bar, to visit friends or family, to Disneyworld, for example, are not covered. For full protection in these situations, a driver should check with his/her auto insurance agent and, if necessary, get an endorsement that will extend coverage to the rental vehicle being used.
By specific extension of coverage, the state plan will also cover the physical damage done to a rental vehicle if the driver of the vehicle is on travel status. Travel status is defined as the time frame when an employee may be reimbursed for travel expenses while on University business. Rental vehicles used for tasks other than official travel will not be covered under the state plan for property damage. However, if a vehicle is rented from the "preferred provider," with whom the University has worked out an agreement to include the cost of a "collision damage waiver" in the basic rental rate, you will be protected from liability for damage to the vehicle whether or not you are on "state business." Before calling a rental car company, you should check with the purchasing office for the current "preferred provider" or check the Transportation Page of the Office of Business Affairs' Business Travel Guide Page (http://www.obfs.uillinois.edu/obfshome.cfm?level=2&path=travel&smldata=transportation).
In the event of any auto accident even remotely connected to the University, prompt reporting is the first and most important step in securing coverage. If you have an accident in a state-owned vehicle, you should call:
UIUC - Car Pool at 333-3910
UIC - CARS at 996-2886
UIS - Tisha Higgason at 206-6700
They will immediately notify the Claims Management Office or CMS. If the vehicle is not state-owned, you should call your campus Claims Management Office (UIS employees should still call Tisha Higgason). Remember, if the seven-day deadline is not met, CMS will most likely deny coverage and you or your department may be responsible for any losses.
When Are You Covered under the Self-Insurance Plan
In 1976, the Board of Trustees established a self-insurance plan to cover liability resulting from the conduct of University business or arising out of professional services. The limits and terms of coverage, as well as the procedures for submitting a claim, are defined in a document entitled "University of Illinois Liability Self-Insurance Plan" (PDF) and are subject to change without notice. The following are some frequently asked questions regarding the self-insurance plan:
For more information, see University of Illinois Liability Self-Insurance Plan.(PDF)
Whom to Call When You Are Notified of a Lawsuit
In 1976, the Board of Trustees established a self-insurance plan to cover liability resulting from the conduct of University business or arising out of professional services. The limits and terms of coverage, as well as the procedures for submitting a claim, are defined in a document entitled "University of Illinois Liability Self-Insurance Plan," (PDF) and are subject to change without notice.
What do I do first? - If an employee is named as a defendant in a lawsuit, where the lawsuit arose out of and in the course of employment, the employee must notify the Campus Legal Counsel immediately following receipt of notice of the suit. The employee should provide a letter to the Office of University Counsel enclosing a copy of the summons and complaint, stating when he or she received the complaint and whether the acts complained of were in the scope of the person's University employment and requesting that the University provide legal representation. When an employee learns of facts which may lead to a claim or lawsuit, the employee should report the matter to his or her supervisor, who in turn should notify the Claims Office or the Office of University Counsel for appropriate investigation and follow-up activities.
What happens next? - By the terms of the University of Illinois Liability Self-Insurance Plan, the selection of attorneys to defend University employees is made by the University Counsel. This is consistent with the practice of insurance companies when a claim is made under an insurance policy. While the defense is generally directed by the University Counsel, the lawyer's ethical obligations require that a his/her ultimate duty of loyalty is to the individual defendant, as opposed to the University. Employees may retain and pay for a private attorney to defend claims made against them in their individual capacities, but any settlement or judgment would not be covered by the plan.
Are all claims covered? - Occasionally, a lawsuit will assert multiple claims, some of which may not be covered under the terms of the plan. Unless the claims are clearly unrelated to the person's University duties, or some other exclusion clearly applies, the University will normally proceed to defend the case without waiving the limitations of coverage under the plan. By law and policy, the University cannot pay fines or punitive damages which are assessed against an individual for intentional misconduct.