State Property Fire Insurance Fund

Property insurance for buildings, structures and business personal property owned by the State of North Carolina is provided through the State Property Fire Insurance Fund (The Fund). All property is required to have coverage for losses caused by Fire and Lightning. However, an agency or university may choose to insure property under its control for other types of property losses.

SPFIF General Property Coverage Policy

Coverage Types

Basic Fire & Lightning

The General Property Coverage Policy is the Fund’s basic policy and is used to provide insurance against losses caused by Fire and Lightning, Extended Coverage, Vandalism, Sprinkler Leakage and Theft. However, the agency or university is covered only for those named perils for which the agency or university has paid a premium and for which the named peril is indicated in the Declarations.

Covered Cause of Loss:

Fire
Lightning

Extended Coverage

Covered Causes of Loss:

Fire
Lightning
Windstorm
Hail
Explosion
Aircraft or Vehicles
Riot or Civil Commotion
Smoke

Broad Form

If coverage is purchased on a Broad Form basis, coverage for all of the perils listed in the basic General Property Coverage Policy is included in addition to damage caused the perils listed below, subject to any limitations in the form. The Broad Form exclusions take the place of the exclusions in the General Property Coverage Policy. However, any other conditions in the General Property Coverage Policy still apply.

Covered Causes of Loss:

Fire
Lightning
Windstorm
Hail
Explosion
Aircraft or Vehicles
Riot or Civil Commotion
Smoke
Vandalism
Sprinkler Leakage
Sinkhole Collapse
Volcanic Action
Falling Objects
Weight of Snow, Ice or Sleet
Water Damage

All Risk - Special Form

If coverage is purchased on an "All Risk" basis, property is covered for risks of direct physical loss unless the loss is excluded or limited by one of the indicated by one of the indicated “All Risk” Exclusion forms. These "All Risk" exclusions take the place of the exclusions in the General Property Coverage Policy. However, any other conditions in the General Property Coverage Policy still apply.

Covered Causes of Loss:

Fire
Lightning
Windstorm
Hail
Explosion
Aircraft or Vehicles
Riot or Civil Commotion
Smoke
Vandalism
Sprinkler Leakage
Sinkhole Collapse
Volcanic Action
Falling Objects
Weight of Snow, Ice or Sleet
Water Damage
Theft
Any Other Loss Not Specifically Excluded

“ALL RISK” PROPERTY EXCLUSIONS (Special Form)

All Risk - Computer & Miscellaneous Equipment

If coverage is purchased on an "All Risk" basis, property is covered for risks of direct physical loss unless the loss is excluded or limited by one of the indicated “All Risk” Exclusion forms. These "All Risk" exclusions take the place of the exclusions in the General Property Coverage Policy. However, any other conditions in the General Property Coverage Policy still apply.

Covered Causes of Loss:

Fire
Lightning
Windstorm
Hail
Explosion
Aircraft or Vehicles
Riot or Civil Commotion
Smoke
Vandalism
Sprinkler Leakage
Sinkhole Collapse
Volcanic Action
Falling Objects
Weight of Snow, Ice or Sleet
Water Damage
Theft
Power Surge
Flood
Any Other Loss Not Specifically Excluded

“ALL RISK” COVERAGE EXCLUSIONS COMPUTERS AND MISCELLANEOUS EQUIPMENT

Flood

The State Property Fire Insurance Fund provides coverage in place of the National Flood Insurance Program.

Coverage is available up to:

$500,000 for buildings and
$500,000 for contents

Business Interruption & Extra Expense

Coverage is for the loss of income and extra expenses incurred due to a covered cause of loss. Values must be reported in order for coverage to apply.

Miscellaneous Additional Coverage

Debris Removal
Sewer Backup
Spoilage
Sprinkler Leakage
Theft
Vandalism and Malicious Mischief
Valuable Papers

Property Reporting Guidelines

Reporting Property Values

Guidelines for Reporting Property Values

By statute, the State Property Fire Insurance Fund (the Fund) pays for losses to State property on a replacement cost basis. This means the Fund will pay the actual cost to replace damaged property, at the time of loss, with new property of like kind and quality and used for the same purpose, without adjustment for depreciation.

In order for an agency of state government to fully recover its loss on a replacement cost basis, it is necessary that the property be insured for its full replacement value. Accuracy in reporting values is important since the Fund cannot pay more than the amount reported. Also, should an agency report values greater than the replacement value, the agency may pay needless insurance premiums or cause the Fund to pay unnecessary premiums for reinsurance.

Since the methods of arriving at the appropriate replacement values for buildings and the contents of buildings differ, the guidelines will treat these types of property separately.

Property Reporting Form (Dual Reporting form for DOA and DOI)

Please complete this form and email to:

Pat Howell
pat.howell@ncdoi.gov
Please call 919-647-0069 with questions

Building Guidelines

For new buildings, the cost of construction is typically the replacement value for the building at that point in time. When reporting the values for insurance purposes, please do not include any costs associated with the purchase of land. Also, do not include any "movable equipment" costs in the building value since these costs are usually part of the contents. For older buildings that are purchased or otherwise acquired, an appraisal may be necessary to arrive at the insurance replacement cost. Keep in mind that the replacement value for buildings is not the same as the market value. Market value is used to determine the sales value of property at a point in time. This is what a willing buyer will pay a willing seller. The replacement value for insurance purposes is the cost to rebuild the structure at the time of loss with one of like kind and quality.

When buildings are renovated, the Fund will need to be notified if the renovations increase the building's replacement value. It is important to note that not all renovation costs increase a building's replacement value. For instance, if the building's existing roof is replaced with a new one, or existing office partitions are replaced with new ones, there may not be any additional value added to the building. On the other hand, an addition that increases the building's size, or the installation of a sprinkler system or alarm system, would increase the replacement value of the building.

Once the agency has established the appropriate replacement value, the Fund will annually adjust the values of buildings and structures in its database for inflation. This is normally done in February of each year. Agencies are encouraged to review the building values annually when the Fund sends out the new building value information to assure that the values are correct for invoicing.

Contents Guidelines

For Business Personal Property (or Contents), the "acquisition cost" (or purchase price) and "replacement cost" are usually the same at the time of purchase for new property. However, in subsequent years the two costs will be different. Consequently, inflationary adjustments need to be made to the values of assets in years following the year of purchase to reflect the replacement cost accurately. For used or older property, the acquisition cost may not indicate the property's replacement cost. Therefore, the property may need to be appraised or compared with the cost to purchase property of like kind and quality in the marketplace. The replacement value of some types of Business Personal Property may actually decrease over time. This is typically the case with equipment where the technology is changing rapidly such as computers and related equipment. For items of this type, it may be more appropriate to use the current market value for comparable equipment. The Fund does not make inflationary adjustments for contents values. This is left to the discretion of the State agency or university.

For economic efficiency, agencies and universities may not maintain records in the statewide fixed asset system for property values less than some established amount, such as $500 or $5,000. However, if only those property values that are recorded in the statewide fixed asset database are reported for insurance purposes, the agency or university may be substantially under-insured in the event of loss. It is recommended that an appropriate amount also be included in the insurance replacement values to account for those values less than the threshold amount. The Fund will reimburse the agency or university for no more than the values reported for insurance purposes.

Newly Acquired or Constructed Property

Property that has been accepted for ownership by the State should immediately be reported to the State Property Fire Insurance Fund for coverage. Failure to report this property may result in a lack of insurance coverage should a loss occur prior to reporting the property to the Fund. There are two major concerns that justify prompt reporting of newly acquired or constructed property to the Fund. First, unless your agency insures all of its property for the same coverage, the Fund does not know which coverage you intend to place on the new property. Also, the coverage under the Fund's reinsurance is limited for newly acquired or constructed property.

SPFIF Property Reporting Form

(Dual Reporting form for DOA and DOI)

Please complete this form and email to:

Pat Howell
pat.howell@ncdoi.gov
Please call 919-647-0069 with questions

State Property Fire Insurance Fund General Claims Reporting Procedures

Notify the police if a law may have been broken.
Give the State Property Fire Insurance Fund prompt notice of the loss or damage. Include a description of the property involved. This notice should ordinarily be given by telephone. Failure to notify the Fund promptly may void the coverage if the ability of the Fund or its reinsurers to adjust the claim is materially affected. However, in no event will a claim be paid unless the Fund is notified within 30 days of the loss occurrence. Special or unusual circumstances that prohibit prompt notification may be taken into consideration.
As soon as possible, give the Fund a description of how, when and where the loss or damage occurred. (Use the Loss Reporting Form)
Take all reasonable steps to protect the covered property from further damage, and keep a record of your expenses necessary to protect the covered property, for consideration in settlement of the claim. If feasible, set the damaged property aside and in the best possible order for examination.
Permit the Fund to inspect the property and records proving the loss or damage.
At the request of the Fund, give us complete inventories of the damaged and undamaged property. Include quantities, costs, values and amount of loss claimed.
Send the Fund a signed Proof of Loss form with your request for payment. The Fund will supply these forms upon request.
Cooperate with the Fund in the investigation and settlement of the claim and keep the Fund apprised of the status of the claim.
Resume your operations as quickly as possible.
Final request for claim payment must be submitted within 90 days of completion of repair or replacement.
The Fund will not honor claims that are submitted for payment more than three years from the date of the loss, unless the Fund agrees to an extension in writing. (This requires that notification; repair, reconstruction or replacement; and final request for claim payment be completed within three years).