Authority/Reference(s) Texas Govt. Code 2254; Texas Contract Management Guide, Ch. 3
Revision Date October 15, 2018

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 specific insurance coverages for services under their contract. Governmental entities (e.g., state agencies, counties, political subdivisions, public universities) are exempt from DFPS insurance requirements.  

New Service                                                                                                          A new service must be evaluated for appropriate insurance coverage and limits. COS will coordinate the evaluation with DFPS staff, HHS Risk Management, and Legal.
Staff must contact the Technical Assistance Mailbox with the following information:

  • Description of the new service to be provided by the contractor.
  • Estimated DFPS expenditures for the contract period.
  • Estimated procurement time line.
  • Designated DFPS Subject Matter Experts for the new service.

 Emergency Purchases
DFPS contract insurance requirements are not applicable to services purchased under an approved justification for emergency purchase, HHS-PCS.01. However, it is expected that the contractor has adequate insurance to conduct their business and can provide a Certificate of Insurance that shows coverage held at the time of the emergency purchase.

 
Type of Insurance Minimum Required Coverage

Commercial General Liability

$300,000 per occurrence / $600,000 aggregate

Commercial Crime Policy

  • Third Party and Employee Dishonesty or "Client Property" endorsement/coverage must be clearly identifiable on the Certificate of Insurance or Self-Insurance documentation.
Business entities with no employees and hospitals are not required to obtain Commercial Crime insurance.

 

$25,000

Professional Liability insurance is required when DFPS contracts for a licensed or certified person to render professional services. Examples of professionals include:

  • Pharmacists;
  • Physicians and surgeons;
  • Nurses;
  • Accountants;
  • Therapists; and
  • Attorneys.
Additionally coverage may be required based on service type
$300,000 per occurrence / $600,000 aggregate
Automobile Liability is required when services delivered involve providing transportation to DFPS clients. May be required depending on procurement development criteria or the Specified services Table I.

Sexual Abuse and Molestation Liability is required when services delivered involve high risk for opportunity of sexual abuse or molestation.

May be required depending on procurement development criteria or the Specified services Table I.

Specified services must comply with the insurance requirements described in Table I.

Additional Contract Insurance Requirements
DFPS, in consultation with the procurement development team, may choose additional insurance requirements for the procurement or contract including Automobile Liability Coverage or Sexual Abuse and Molestation Coverage.

Equivalent Insurance Coverage
When an equivalent insurance coverage is submitted to satisfy minimum insurance requirements, the entity's insurance representative must submit written verification of the equivalency.
If the required contract insurance is not identifiable on the Certificate of Insurance, DFPS staff will require the Contractor to provide equivalent insurance verification from the contractor's insurance representative.
DFPS reserves the right in its sole discretion to determine whether a document provided to DFPS meets the current minimum insurance requirements, coverage, or limits.

Self-Insurance
All self-insurance plans submitted must also include documentation supporting that the self- insurance plan's funds, assets, bonds, etc., will cover any losses to the same extent as provided for in the more commonly seen insurance policy.

Obtaining Proof of Insurance and Required Documentation
As specified in Comptroller’s State of Texas Procurement and Contract Guide, insurance policies should be with insurance companies or carriers rated for financial purposes with an A.M. Best Company rating of "A", and whose policies cover risks located in the State of Texas. DFPS requires a minimum of “B” rating. 
In order to verify compliance with coverage and limits required by DFPS, the contract file must include:

  • Certificate of Insurance.
  • Attachments of A.M. Best ratings for all insurance companies issuing insurance policies.
  • Documents sufficient to verify self-insurance, if applicable.
  • Insurance representative's written verification of equivalent insurance, if applicable.
  • Copies of insurance policies, or equivalent document to the Certificate of Insurance, if applicable.

The Certificate of Insurance must be issued to DFPS or designate DFPS as the Certificate Holder.