| Preventing Property Losses RisKey |
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| RisKey |
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A Guide to Basic Asset Protection Programs
State employees have an ethical and legal responsibility to protect state assets in their custody and control. Often we focus on the major, high cost property losses like building fires. But the increase to the agency deductible now makes all your loss prevention efforts even more important.
New Deductible
Since July 1, 2002, state agencies with more than 20 Legislatively Approved Budgeted FTE (when rounded to the nearest whole number) have paid the first $2500 for each occurrence of loss to state owned property. Smaller agencies have paid the first $1000. This is called the deductible.
What does it mean for agencies?
Prior to 1989 you paid the first $100 of loss. That year the deductible went up to $500. Your agency had to find $500 in your operating budget to add to the check from Risk Management Division to be able to repair or replace the damaged or lost property. Starting July 1, 2002 each time there is a covered loss to state property you pay the first $2500 or $1000. If the loss is under the deductible it will no longer be reported to RMD. Since RMD will not handle losses under the deductible, we will no longer collect from third parties that may have caused the damage. In such cases, you will need to pursue those recoveries.
The things you do to avoid a loss is now much more valuable to your agency. What can you do to limit loss frequency?
Steps for Loss Prevention
- Learn from the past. Review prior loss experience. Agency Risk Coordinators get your claim data from us. You may need an additional record keeping system to track losses we will no longer handle.
- What types of losses have you experienced?
- Losses caused by:
- Persons. Such as: theft, vandalism, breakage, vehicle collisions, fraud, embezzlement, pollution or arson.
- Acts of nature. Such as: fire, water leaks/seepage, flood, wind, power interruption, landslide or mold growth.
- Errors and Omissions. Things done or not done that result in a loss.
- Type of property lost or damaged:
- Vehicles.
- Buildings or other structures.
- Property: landscaping, parking lots, benches or signs.
- Building contents: office furnishings, computers, servers or phone systems.
- Field Equipment: lap top computers, scientific equipment, cameras or palm pilots.
- Cash and securities: negotiable notes, bonds or checks.
- Where are the losses coming?
- Particular programs or activities: training, use by others such as clients or the public; displays.
- Geographic locations: urban vs. rural, particular offices or cities.
- Category of user: employee/staff, volunteer, trainee, client, student/intern, contractor or temporary service employee.
- Use incident analysis techniques to determine system issues. Investigations gather and document the facts. The next step is to analyze the evidence. This allows you to determine all the things that led up to the incident or loss. Not to place fault or blame but to make improvements.
- Do you regularly investigate each property loss?
- Do you document facts and establish corrections or future improvement activities?
- What systems do you analyze?
- People
- Environment
- Equipment
- Management
- Do you follow-up to be sure improvements are implemented?
- Do you track and address repetitive losses?
- Accountability for loss prevention. Do employees know what they are supposed to do it? Do they know how? Do they get any feedback?
- Who is responsible to investigate losses, analyze causes and implement improvements?
- Do they know how to investigate, analyze and improve?
- Do they have the resources, authority and executive backing to make needed changes?
- Who pays for the loss? Who pays for the improvements?
- How does your agency recognize good performance for loss prevention or mitigation?
- Do you have specific programs to prevent property losses? Your immediate goal is to prevent loss frequency since you pay the first dollar of loss.
- Loss prevention is specific to the type of loss. Remember you reviewed your data earlier. For example;
- Fire prevention: control ignition sources or fuel; suppression systems.
- Water Incursion: prevent leaks from roofs, windows, faucets, storage tanks, piping.
- Power Fluctuations: power conditioning, reliable sources.
- Theft and Vandalism: security protocols, background checks, tools to tie down or lock up equipment or property that is portable and easily stolen.
- Damage and Breakage: preventive maintenance, user instructions and training, familiarity with equipment.
- Exceptional items: special programs to protect one of a kind, fine art, historic properties, cash, securities.
- Vehicles: passenger cars, vans, trucks, specialty vehicles.
- Loss mitigation. Can you respond quickly to a minor problem to prevent it from developing into a more costly loss? For example, boarding up a broken window to prevent water damage to the interior due to rain.
- Policies and procedures to guide and direct action.
- Effective, prompt reporting systems.
- Rapid response plans.
- Contract, Warrantees and Agreements. These can be effective tools to transfer risk and recover losses. Conversely, they could make you responsible for someone else’s negligence.
- Do you hold people responsible to prevent or pay for a loss?
- Do you require written agreements to protect vehicles, equipment or buildings used by others?
- Do you follow requirements to be able to recover under warrantees?
- Do people know their authority to sign contracts or agreements?
- Are you able to recover losses from other funding sources, such as grants?
- Subrogating or Recovering Costs. Through this process you can recover some of the loss from third parties who cause loss. You will need an accounting practice and cost center. You will also need to establish that the other party is at fault.
- Who is responsible to recover losses? Is a person assigned and trained?
- Do you have a policy and procedures to guide recovery?
- How do you account for recoveries? How is the recovery used?
- Do you have procedures to preserve evidence or prove your loss?
Disclaimer: This RisKey is intended to provide general guidance to help you design and implement polices and practices to prevent a wide range of property losses, not just property losses covered under the state Self-Insurance Fund. Losses described above do not imply coverage from DAS-RMD.
Our General Counsel at DOJ has reviewed this RisKey.
06/02
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