FIRE INSURANCE. — On April 18, 1900, the Regents directed the secretary "to cancel all insurance in accordance with the instructions of the Auditor General; the State having by law decided to carry its own insurance." In this record, quite clearly, only fire insurance is referred to. The largest total of fire insurance mentioned in any earlier Regents' record was $200,000 (Apr., 1899). This was presumably the total coverage thus canceled.
The ancient adage "Put not your trust in princes" received a new illustration in the summer of 1911 with the burning of what was then known as the Old Medical Building (see Part VIII: First Buildings). When the Regents sought reimbursement for this burned building through the state insurance fund all responsibility was denied on the ground that the constitutional corporation entitled "The Regents of the University of Michigan," being set off and separated from the state government in general, is ineligible to compensation from a state fund for its loss by fire.
In March, 1912, Regent Clements, chairman of the buildings and grounds committee, reported that as the auditor-general, on the basis of an opinion by the attorney general, would not object to auditing University vouchers for fire-insurance premiums, the committee to which the question of protection had been referred with power had placed specific insurance upon University buildings and contents to a total of $1,750,000. By 1936-37, buildings and contents were covered to approximately $9,500,000.
The rate paid for fire insurance originally was $.80 per hundred for five years, or $.16 per hundred per year. This rate continued until the formation of the companies' so-called Rating Bureau, under whose administration the average rate was early increased to $1.20 per hundred for three years, or an annual rate of $.40. This was an increase of 150 per cent over the original rate. However, with the great increase of fireproof buildings in later years, with the use of coinsurance clauses where these seemed desirable, and on the basis of the University's "fire experience," the rate was gradually reduced again to its figure in 1938, namely, $.535 per hundred for three years, or slightly less than $.18 per hundred per year. In 1939 we rearranged our coverage, placing practically all our property values under blanket form at a rate of $.23 per hundred for three years, or less than $.08 per annum, increasing our coverage $11,000,000 without increasing the amount of our premiums. In December, 1940, all of the University property located in Ann Arbor, with the exception of dwellings, some small, miscellaneous properties, and properties handled by the Investment Office, were covered under a blanket form at a three-year rate of $.215 per hundred of insurance, or $.072 on an annual basis.
The University's fire-loss ratio has been excellent over the whole history of nearly thirty years. A well-organized watchman service, frequent inspections, and extremely careful attention to the recommendations of inspectors have all helped. One important influence in securing Page 280low rates lies in the interior system of fire mains by which pumps, installed in duplicate and connected with the University's naval tank, can be started instantly upon an alarm of fire, and can so increase the pressure in the fire mains reaching every University building as to give to firemen ample water at unusually high pressure.
The chief source of such fires as the University has had seems to be the cigarette. During the six years 1934-40, a total of eighty-nine fires was reported, mostly small, and out of this total, forty, or 45 per cent, were traceable to smokers' carelessness.
Workmen's compensation insurance. — Although the corporation known as "The Regents of the University of Michigan" is exempted from the terms of the Workmen's Compensation Act of the state, the Regents have desired to keep pace, in University operations, with this humane type of legislation and have protected the institution and its employees from the time when workmen's compensation insurance went into effect in Michigan. At first the University was permitted to except from the policy members of the faculty, officers, clerks and stenographers, and similar groups to which the Compensation Act is not in its philosophy particularly applicable. In later years legislation and the regulations of the State Insurance Department have not permitted companies to take such "partial risks." At present every person on the University pay roll, of whatever status, is protected by the workmen's compensation insurance policy, covering hospitalization and other prescribed benefits, and prescribed amounts of pay during incapacity from occupational accident. In cases of employees on a permanent or semipermanent basis whom the University might continue at full salary during temporary incapacity, the amount payable under the insurance policy reduces the net cost of such continuance of salary. In the policy of insurance the company is always required, in its acceptance of responsibility, not to set up as a defense the fact that the Regents are not legally subject to the Workmen's Compensation Act.
Since 1938, the Regents have considerably changed and expanded the insurance protection carried. At this time, February, 1941, there are the following coverages:
Fire insurance: more than $25,000,000, largely in blanket policies, with a rate of $.215 per hundred for three years, or $.072 on an annual basis. Also appropriate specific coverage on investment properties and on certain detached properties.
Automobile insurance: on all University-owned automobiles and trucks, against fire, theft, property damage within $5,000, and public liability with limits of $20,000 to $40,000. The University owns over sixty trucks and trailers.
Boiler insurance: carried largely for the value of the inspection service.
Fidelity bonds: every person on the pay roll is bonded. Certain officials and employees handling cash or securities are bonded to the extent of $150,000 each. Other employees responsible for lesser amounts of cash or securities are covered by smaller bonds, and finally, all other employees are covered to a grand total of $50,000 for this classification.
Burglary, safe, and holdup insurance: carried in what are believed to be appropriate amounts with consideration of the exposure due to vaults inadequate in space and security.
Partly as a matter of satisfactory public relations in case of accidents, liberal public liability insurance is carried on all University premises, including elevators.
Workmen's compensation insurance.
Other risks specifically covered include earthquake (McMath-Hulbert Observatory, at Lake Angelus); films in transit; exhibits of various sorts; certain especially valuablePage 281art pieces; radium; parcel post and registered mail; miscellaneous thefts; windstorm; and builder's risk on new buildings. Also the terms of trust agreements under which revenue bonds are issued require insurance against loss of rent due to fires, etc. The courses in flying require a special policy covering accidents to student participants.