164A.577 Private loss insurance or self-insurance pool option -- Requirements --

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A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

Resumption of state insurance coverage -- Annual inspection -- Coverage

requirements and minimums.

(1)Notwithstanding KRS 56.065 to 56.180 and any other law to the contrary:

(a)Instead of insurance coverage provided through the Commonwealth's property

and casualty insurance fund, the governing board of each institution may,

subject to paragraph

(b)of this subsection, elect to obtain insurance under this

section to cover all of the state property in the institution's possession against

loss by fire and other hazards;

(b)An institution whose governing board elects to obtain insurance under this

section shall:

1. Not be required to obtain approval by the Finance and Administration

Cabinet or any other state agency or official to terminate the institution's

insurance coverage through the Commonwealth's property and casualty

insurance fund;

2. Notify the secretary of the Finance and Administration Cabinet at least

sixty

(60)days before terminating the institution's insurance coverage

through the Commonwealth's property and casualty insurance fund;

3. Ensure that the insurance is in place immediately following termination

of the institution's insurance coverage through the Commonwealth's

property and casualty insurance fund;

4. Comply with any bidding or advertising requirements under KRS

Chapters 45A and 424; and

5. Comply with subsection

(2)of this section; and

through the Commonwealth's property and casualty insurance fund

under this subsection shall be permitted to resume that coverage,

without any need for approval by the Finance and Administration

Cabinet or any other state agency or official, by providing the following

notices to the secretary of the Finance and Administration Cabinet:

a. At least six

(6)months prior to the effective date of the

institution's resumption of coverage through the Commonwealth's

property and casualty insurance fund, as provided under

subparagraph 2. of this paragraph, a notice that the institution

intends but is not obligated to resume coverage through the fund;

and

b. At least three

(3)months prior to the effective date of the

institution's resumption of coverage through the Commonwealth's

property and casualty insurance fund, as provided under

subparagraph 2. of this paragraph, a notice that the institution is

resuming coverage through the fund.

2. Upon receipt of the notices required under subparagraph 1. of this

paragraph, the Finance and Administration Cabinet shall insure all of the

state property in the institution's possession against loss by fire and other

hazards through the Commonwealth's property and casualty insurance

fund, and coverage shall become effective not later than:

a. The next date of renewal of the coverage provided through the

fund; or

b. Any other date agreed upon by the institution and the cabinet.

(2)An institution that obtains insurance under this section shall ensure that an annual

inspection is made of each state building and its contents in the institution's

possession, for the purpose of determining the unnecessary causes of a fire hazard

therein, and recommendations are received for corrective actions, by either:

(a)1. Allowing the Finance and Administration Cabinet to have the inspection

made and to make recommendations for corrective actions, consistent

with the inspections and recommendations made under KRS 56.170.

2. The institution shall pay a fee to the Finance and Administration Cabinet

for an inspection made under this paragraph if:

a. i. A fee is charged; and

ii. The fee is not in excess of the fee charged;

to agencies for an inspection made under KRS 56.170; and

b. The fee is reasonable; or

(b)1. Having a qualified third party approved by the institution's insurer

conduct the inspection and make recommendations for corrective

actions.

2. The institution may pay a reasonable fee for an inspection made under

this paragraph if the fee is not included in the premium charged by the

insurer.

(3)Insurance obtained under this section:

(a)May be provided:

1. By an authorized insurer as defined in KRS 304.1-100; or

2. Through a self-insurance pool if the pool is:

a. Adequately reinsured by an authorized insurer as defined in KRS

304.1-100; and

b. Capable of insuring all of the state property in the institution's

possession;

(b)Shall state the following for each insured building and its contents:

1. Estimated replacement cost; and

2. The amount of coverage provided;

(4)of this section, shall insure each

building and its contents for an amount equal to one hundred percent

(100%) of the replacement cost determined through a certified

replacement cost appraisal performed at the direction of the institution

by an appraiser:

a. Licensed to perform appraisal services under KRS Chapter 324A;

and

b. Experienced in appraising commercial or governmental property.

2. As used in this paragraph, "replacement cost" includes the increased

cost of construction brought about by code changes that:

a. Have occurred since the original structure was built; and

b. Are required to be incorporated within a rebuilt structure;

(d)Shall contain an agreed amount provision; and

(e)Shall include:

1. Ordinance and law coverage at not less than five million dollars

($5,000,000);

2. Debris removal coverage at not less than one million dollars

($1,000,000);

3. Extra expense coverage at not less than five million dollars

($5,000,000); and

4. For any building containing a steam boiler, boiler and machinery

coverage at not less than the total value of the real and personal property

in the building in which the steam boiler is located.

(4)A governing board may obtain actual cash value coverage of a building and its

contents if a certification signed by the governing board chair is attached to the

insurance policy or contract, or self-insurance pool contract, stating that it would

not be fiscally responsible to provide replacement cost coverage for the building

being insured.