Authority/Reference(s) State of Texas Procurement and Contract Management Guide; General Appropriations Act, House Bill 1, 86th at R.S. Article IX, Section 17.10(b)(9)
Revision Date March 1, 2020

Policy

Any time DFPS prepares to enter into a contract for goods or services, the agency and our clients are exposed to increased levels of risk. DFPS must manage this risk by ensuring that appropriate insurance requirements are included in any procurement and contract.

DFPS requires all non-governmental entities to carry sufficient insurance coverage to safeguard their organization from the risks associated with conducting their business activities. This may look different depending on several factors, including the size of the organization, how long they have been in business, and specific risk factors associated with the goods or services they provide to or on behalf of DFPS.

A new service must be evaluated, collaboratively with DFPS staff, HHS Risk Management, and Legal, to determine if specific insurance coverage and limits are needed. Based on any factors that could increase risk to the agency, DFPS may require specific coverages and limits such as Automobile Liability Coverage or Sexual Abuse and Molestation Coverage.

For services without specific insurance coverage requirements, the standard insurance terms, as outlined the Uniform Terms and Conditions, will apply, and contract staff will be responsible for:

  • Obtaining proof of insurance coverage, including coverage dates.
  • Verifying AM Best Company Rating. The Comptroller’s State of Texas Procurement and Contract Guide recommends that insurance policies should be with insurance companies or carriers rated for financial purposes with an AM Best Company rating of “A”, However, DFPS requires a minimum of “B” rating.
  • Reviewing insurance coverage, at least annually, to ensure no lapse of coverage.

For services requiring specific coverages and limits, the procurement and contract will clearly specify these limits. Contract staff are responsible for the above review actions as well as ensuring any specified limits are verified prior to execution of the contract.

Governmental entities (e.g., state agencies, counties, political subdivisions, public universities) are exempt from DFPS insurance requirements.

Obtaining Proof of Insurance and Required Documents

To verify compliance with DFPS insurance requirements, the contract file must include:

  • Certificates of Insurance throughout the life of the contract. .
  • AM Best ratings for all insurance companies issuing insurance policies
The Certificate of Insurance must be issued to DFPS or designate DFPS as the Certificate Holder.