PRO-607 Risk Management Considerations in Procurement: Insurance, Bonds and Sureties

SCOPE: 

The purpose of this policy is to establish requirements and official procedure for risk management-related components of state contracting, including the procurement of insurance and bonds; certification documentation standards; and establishing any bond or surety in a solicitation/contract.

When the state contracts with a supplier, their services necessarily include an inherent liability risk, or cost of defense, to the State of Wisconsin. There are various risk-related factors agencies must take into consideration in procurement activities.


Standard and High-Risk Insurance Coverage in Contracts

Agencies will prescribe either standard, or high-risk, insurance coverage requirements in state contracts as provided herein.

A high-risk service procurement means a contract, procurement or purchase that significantly increases the possibility of loss or exposure to loss to the State of Wisconsin, its agencies, employees, agents or officers from a third party. See Appendix A: Insurance Coverage Limits Requirements.

Some procurements have varying insurance requirements. An agency having insurance questions about procurement situations should contact its agency risk manager or the State Bureau of Risk Management (Risk Management).

Workers compensation insurance coverage is required by statute for commodity and standard service procurements. The state may require such coverage even when the number of employees is fewer than that for which the statutes require workers compensation insurance.


Certificates of Insurance

Depending upon the level of risk the contract presents, agencies may require submittal of a current certificate of insurance. When an agency makes a purchase through a statewide contract issued by the Bureau, the Bureau will have obtained any required certificate of insurance. See PRO-402, Statewide Contracts: Standards and Utilization.


Bonds and Sureties

The State Bureau of Procurement (Bureau), or an agency operating under delegated authority, may require sureties from bidders or contractors when such action is deemed to be in the best interests of the state.

A surety is a guarantee that a supplier will perform or complete some specific act or process. Sureties will be justified, will not be required as a matter of course, and will not be used to restrict competition. 


Procurement of Insurance and Bonds

Insurance and bonds are commodity procurements. Risk Management will approve purchases of insurance and bonds, regardless of the dollar amount.

Click below for full policy document:

PRO-607 Risk Management Considerations in Procurement: Insurance, Bonds and Sureties

Additional Reference Materials:

Appendix A: Insurance Coverage Limits Requirements