Policy: Insurance Loss on Damaged Property: Account Transactions Policy

UNIVERSITY POLICY
Date Revised: June 21, 2024
Date Effective: January 2014
Responsible University Official: Vice Chancellor for Administration and Finance
Policy Owner: Controller
Policy Contacts: Controller and Safety and Risk Management

REASON FOR POLICY

This policy guides the internal accounting operations of expenses and revenue related to insurance loss of UW-Platteville owned property.

SCOPE

This policy is relevant to the following units:

• Safety and Risk Management
• Budget Office
• Financial Services
• Facilities Management
• University department which incurs damage to UW System property

BACKGROUND

When damage to UW-Platteville property occurs, institutions may receive reimbursement for their losses from the State Self-Funded Property Program (SSPP). In the case of subrogation, reimbursement may also come from the responsible parties and/or their insurers. Fund 999 was established to account for the receipt and disbursement of proceeds from losses without the need to encumber regular departmental operating budgets. The UW System Policy 605 Loss-Fund Operations establishes guidelines for the operation of fund 999, use of the revenue, and associated accounting and reporting procedures.

DEFINITIONS

Fund 999 – Insurance Loss: Per the UW System Chart of Accounts, Fund 999 is classified as a “Custody Account” for insurance loss receipts. It is used to account for the receipt and disbursement of proceeds from insured losses. See Wisconsin Accounting Manual 03-07.

Department: A six-digit code established and defined by UW-Platteville. The code is the middle component of a funding string. Each funding string on campus is assigned to an account manager who exercises fiduciary responsibility for the funds that flow through the funding string (commonly called an account). Each property damage incident requires a separate department identification code (e.g., “Brockert Water Damage / 999-399977-7).

Account Code: A four-digit code established and defined by UW System for consistency in accounting practices. The account code 9911 is used for revenue deposited for reimbursement of expenditures resulting from insured losses and may only be used with Fund 999.

Account Manager: The Director of Safety and Risk Management shall be the account manager for each Fund 999 account established.

Excess Expenditures: A property damage incident may result in excess expenses due to deductibles or insurance proceeds not fully covering the replacement value of items.

Self-Funded Insurance: The State Self-Funded Property Program [Statute 20.865(1)(f)] provides coverage for loss of University-owned real and personal property, motor vehicle physical damage, business interruption (revenue loss that occurs as a result of property loss), extra expense (incurred after a property loss to maintain operations), and some bailments. The SSPP is administered through the Bureau of State Risk Management (BSRM) in the Department of Administration through which all final coverage decisions and loss payments are made.

POLICY STATEMENT

All insurance-related expenditures will be charged to fund 999, and all insurance proceeds will be deposited into fund 999. Any excess expenditures or excess revenues shall be transferred to the departments that incur the insurance loss. This will maintain an audit trail of the use of the insurance proceeds.

PROCEDURES

When damage has occurred to UW-Platteville property, the following steps will be implemented.

Department/Unit Impacted by the Damage

• Notify the Director of Safety and Risk Management of the incident

Director of Safety and Risk Management

• Notify Budget Office and Controller
• Submit the Account Code Request Form to request the creation of a new funding string to track the revenue and expenditures of the property damage
• Ensure all expenditures related to the property damage are posted to the new funding string
• Submit insurance claim (and other related steps specific to the Safety and Risk Management Office)
• Upon conclusion of insurance claim
  • Deposit insurance claim check
  • Transfer excess expenditures to the campus unit which incurred the loss
  • Contact Budget Office staff to request closure of the funding string

Budget Office Staff

• Initially ~ Process the request for a new funding string
• Monthly ~ Review the account with Safety and Risk Management
• Conclusion ~ Process the request to close the funding string

Controller and Financial Services Staff

• Create funding string
• Inform Budget Office, Safety and Risk Management, Cashier’s staff, and impacted department/unit the funding string is ready for use
• Deposit insurance reimbursement to the applicable funding string using account code 9911/Insurance Loss Reimbursement
• Report incident impact on applicable lists (e.g., Asset Tracking)

Note: In the rare event, that there are excess insurance proceeds, the Director of Safety and Risk Management will coordinate with the UW System Risk Management to determine whether the funds will need to be returned to UW System according to Policy 605. If the campus is allowed to retain the funds, an expense transfer should move an appropriate expense into the insurance loss department to utilize the remaining proceeds. The Cost Transfer Tool or the General Ledger Transfer Request Form should be submitted to request any transfers.

RESPONSIBILITIES

Refer to the above “Procedures” section.

CONTACTS

Those designated to receive questions and feedback on the policy.

Related Documents

UW System Administrative Policy 605, Loss-Fund Operations
Wisconsin State Statutes 20.907(5)(e)(4) Custody Accounts. Insurance loss receipts.

History

Original Issue Date: January 1, 2014
Revision History:
January 25, 2017: Updated UW System policy references to new numbering scheme
May 1, 2018: Updated the frequency in which reconciliation would be performed
May 24, 2019: Moved to new template format and updated website links
February 20,2020: Updated website links
August 7, 2023: Moved to new template format and updated contacts
June 21, 2024: Updated contact

A pdf of this policy is available as a file attached to the article.

Scheduled Review:

September 2028