RELATES TO: KRS Chapter 45A, 160.105
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
156.070(4) authorizes the
Kentucky Board of Education to promulgate administrative regulations necessary
for the efficient management, control, and operation of the schools and
programs under its jurisdiction.
KRS
156.070(5) requires the
board to promulgate administrative regulations relating to programs, services,
publications, capital construction and facility renovation, equipment,
litigation, contracts, budgets, and all other matters which are the
administrative responsibility of the Department of Education.
KRS
160.105 requires the board to promulgate
administrative regulation requiring each school district to provide for fire
and extended insurance coverage on nonsurplus buildings, at not greater than
replacement cost but allowing for coinsurance and deductible features. This
administrative regulation establishes requirements for the level of insurance
coverage needed for school district buildings and structures.
Section 1.
(1) A local board of education shall procure
insurance coverage, which reflects the estimated replacement cost, actual cash
values, and the amount of fire and extended insurance coverage provided for
each building and its contents owned by the local board of education which is
not surplus to its needs as shown by the approved facilities plan.
(2) A building and its contents shall be
insured for an amount equal to 100 percent of the replacement cost as shown on
the schedule of values certified by the Kentucky Department of Education or as
determined through a certified replacement cost appraisal of the building and
its contents performed by an appraiser experienced in appraising commercial or
governmental property and licensed to perform appraisal services in Kentucky
pursuant to
KRS
324A.045, and each policy covering the
buildings and contents shall provide an agreed amount endorsement.
(3) The replacement cost of the building
shall include the increased cost of construction brought about by code changes
that have occurred since the original structure was built and which would be
required to be incorporated within the rebuilt structure.
(4) The following minimum sublimit shall be
required:
(a) Ordinance and law -
$5,000,000.
(b) Debris removal -
$1,000,000.
(c) Extra expense -
$5,000,000.
(5) Despite
the required insuring of individual buildings and contents at 100 percent of
replacement cost, a blanket limitation on an insurance carrier's liability per
occurrence may be procured if:
(a) An
individual district's schedule of values exceeds $100,000,000; and
(b) The blanket limitation equals at least
$100,000,000 and at least fifty (50) percent of total replacement costs.
Section 2.
Insurance on property specified in Section 1 of this administrative regulation
shall be provided by carriers licensed to do business in the State of Kentucky
and shall have features that provide for:
(1)
A maximum of eighty (80) percent coinsurance;
(2) A per occurrence deductible on all perils
not to exceed five (5) percent of the prior year's capital outlay allotment or
$25,000, whichever amount is smaller; and
(3) A replacement cost endorsement.
Section 3. A building requiring
insurance and containing a steam boiler shall have boiler and machinery
coverage having a limit of liability equal to the total value of the real and
personal property in the building in which the steam boiler is
located.
Section 4. A school
district may cover property in a self-insurance pool providing coverage at
least equal to the standard of coverage specified in Sections 2 and 3 of this
administrative regulation. A self-insurance pool shall be adequately reinsured
by a carrier approved to do business in the state of Kentucky and shall provide
facilities for insuring all of the property of an individual district to which
this administrative regulation applies.
Section
5. If a school building cannot be insured on a replacement cost
basis, the policy insuring the building shall carry an agreed amount
endorsement, and a certification signed by the local superintendent and board
chairman shall be attached to the policy stating that it would not be fiscally
responsible to provide replacement cost coverage for the building being
insured.
Section 6. Insurance
coverage provided for in Sections 2 and 3 of this administrative regulation
shall be obtained by local school districts by bids after having advertised for
bids, if bids are required by KRS Chapter 45A or 424.
