Authority/Reference(s) Texas Govt. Code 2254; Texas Contract Management Guide, Ch. 3
Revision Date October 14, 2016

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 can transfer some of this risk to the entities providing the goods or services by ensuring that appropriate insurance provisions are included in the procurement or contract.

When working with HHS-PCS on the solicitation of goods or services , DFPS must ensure that the type and amount of insurance required in the procurement or contract is appropriate.

Governmental entities (e.g., state agencies, counties, universities) are exempt from DFPS insurance requirements and those requirements are not included in the contract templates used for governmental entities.  

If the governmental status of an entity is in question, contact the Contracts Technical Assistance mailbox for assistance.

DFPS requires all non-governmental entities to carry the following types of insurance for direct delivery of protective services and other services under their contract with DFPS:

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

Services procured prior to April, 2012 must comply with the insurance requirements in Table II as described below:

 
Type of Insurance Required Coverage Limits

Commercial General Liability

$300,000/ $600,000

Dishonesty Bond

$10,000

Professional Liability

$300,000/ $600,000

Services procured after April, 2012 must comply with the insurance requirements in Table III as described below:

 

Type of Insurance

Required Coverage Limits

Commercial General Liability

$300,000/ $600,000

Commercial Crime Policy with 3rd Party and Employee Dishonesty or "Client Property" endorsement/coverage and must be identifiable on the Certificate of Insurance or Self-Insurance documentation.

$25,000

  • Business entities with no employees and hospitals are not required to obtain Commercial Crime insurance.

Professional Liability

$300,000/ $600,000

Emergency Purchases

DFPS contract insurance requirements are not applicable to services purchased under an approved justification for emergency purchase, HHS-PCS.01. However, the contractor is required to provide a Certificate of Insurance to record all available insurance and A.M. Best ratings for all insurance companies issuing insurance policies.

Adjusting Existing Contract Insurance Requirements

The DFPS service development lead (DFPS lead), in consultation with the procurement development team, may choose additional insurance requirements for the procurement or contract. If a contract is not solicited through a written procurement document, then contract staff must coordinate with COS to determine the appropriate insurance requirements for the contract.

New Service

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

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

Professional Liability Insurance

DFPS should require Professional Liability insurance when a licensed or certified person renders professional services. Examples include:

  • Pharmacists;
  • Physicians and surgeons;
  • Nurses;
  • Accountants;
  • Therapists; and
  • Attorneys.

Situations when Professional Liability is recommended include when the professional’s activities or advice could do harm. Activities with state clients that involve health or behavioral care, such as:

  • Licensed Social Worker;
  • Licensed Counselor;
  • Psychiatrist; and
  • Psychologist.

Proof of Insurance

In order to verify compliance with coverage and limits required by DFPS, the contractor must submit a Texas Department of Insurance approved Certificate of Insurance, preferably the DFPS Certificate of Insurance, Form 4736 . Contractors must attach the A.M. Best ratings for all insurance companies issuing insurance policies for the contract insurance requirements. Contractors may attach copies of insurance policies, or equivalent document to the Certificate of Insurance.

All insurance policies must be with insurance companies or carriers rated for financial purposes "B" or higher, whose policies cover risks located in the State of Texas.

The Certificate of Insurance must be issued to DFPS or designate DFPS as the Certificate Holder, unless the Certificate of Insurance does not have the format for issuance or a designated Certificate Holder.  

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.

Equivalent Insurance Coverage

When an equivalent insurance coverage is submitted to satisfy the DFPS minimum insurance requirements, the entity's insurance representative must submit written verification of the equivalency for the required DFPS minimum insurance coverage.

DFPS Form 4736, DFPS Certificate of Insurance, can be an accepted form of written verification of insurance 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 sole discretion to determine whether a document provided to DFPS meets the current minimum insurance requirements, coverage, or limits.

Required Insurance Documents provided by Contractor prior to Contract Execution

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