B-150553, JANUARY 21, 1963, 42 COMP. GEN. 392

B-150553: Jan 21, 1963

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PROPERTY - PRIVATE - LOANED TO GOVERNMENT - INSURANCE INSURANCE PREMIUMS TO COVER TORT LIABILITY AND LOSS OR DAMAGE TO PROPERTY THAT THE UNITED STATES CIVIL SERVICE COMMISSION IS REQUIRED TO PURCHASE AS A CONDITION TO THE USE OF LOCAL SCHOOL FACILITIES IN WHICH TO CONDUCT EXAMINATIONS MAY BE PAID FROM APPROPRIATED FUNDS. WHEN THE INSURANCE COVERAGE IS NOT REQUIRED. THE GENERAL RULE THAT THE GOVERNMENT WILL ASSUME ITS INSURANCE RISKS DOES APPLY TO THE PRIVATE PROPERTY. IT IS EXPLAINED THAT THE BORAD OF EDUCATION AT UTICA. HAS NOTIFIED THE COMMISSION'S LOCAL REPRESENTATIVES THAT IT WILL NO LONGER PERMIT USE OF SCHOOL BUILDINGS FOR CIVIL SERVICE EXAMINATIONS UNLESS THE COMMISSION PROVIDES LIABILITY INSURANCE AND IT HAS INCLUDED IN ITS FORM OF APPLICATION FOR USE OF SCHOOL PROPERTY A PROVISION READING AS FOLLOWS: THE APPLICANT WILL ASSUME EXCLUSIVE CONTROL OF THE PREMISES ABOVE DESCRIBED DURING THE PERIOD APPLIED FOR AND PROVIDE GENERAL LIABILITY INSURANCE IN STANDARD FORM PROTECTING THE BOARD OF EDUCATION AGAINST ANY LIABILITY WHATSOEVER OCCASIONED BY ACCIDENT.

B-150553, JANUARY 21, 1963, 42 COMP. GEN. 392

PROPERTY - PRIVATE - LOANED TO GOVERNMENT - INSURANCE INSURANCE PREMIUMS TO COVER TORT LIABILITY AND LOSS OR DAMAGE TO PROPERTY THAT THE UNITED STATES CIVIL SERVICE COMMISSION IS REQUIRED TO PURCHASE AS A CONDITION TO THE USE OF LOCAL SCHOOL FACILITIES IN WHICH TO CONDUCT EXAMINATIONS MAY BE PAID FROM APPROPRIATED FUNDS, THE POLICY OF THE UNITED STATES TO ASSUME ITS OWN INSURANCE RISKS NOT BEING ONE OF STATUTORY LAW IT HAS NO APPLICATION TO PRIVATE PROPERTY; HOWEVER, WHEN THE INSURANCE COVERAGE IS NOT REQUIRED, THE GENERAL RULE THAT THE GOVERNMENT WILL ASSUME ITS INSURANCE RISKS DOES APPLY TO THE PRIVATE PROPERTY, THE PAYMENT OF INSURANCE PREMIUMS NOT BEING A NECESSARY EXPENSE OF THE EXAMINATION PROGRAM.

TO THE CHAIRMAN, UNITED STATES CIVIL SERVICE COMMISSION, JANUARY 21, 1963:

YOUR LETTER OF JANUARY 2, 1963, PRESENTS FOR DECISION TWO QUESTIONS CONCERNING THE USE OF APPROPRIATED FUNDS TO PAY PREMIUMS FOR LIABILITY INSURANCE COVERING THE OWNERS OR TRUSTEES OF NON-FEDERAL PROPERTY DURING A PERIOD OF USE OF SUCH PROPERTY FOR CIVIL SERVICE EXAMINATIONS.

IT IS EXPLAINED THAT THE BORAD OF EDUCATION AT UTICA, NEW YORK, HAS NOTIFIED THE COMMISSION'S LOCAL REPRESENTATIVES THAT IT WILL NO LONGER PERMIT USE OF SCHOOL BUILDINGS FOR CIVIL SERVICE EXAMINATIONS UNLESS THE COMMISSION PROVIDES LIABILITY INSURANCE AND IT HAS INCLUDED IN ITS FORM OF APPLICATION FOR USE OF SCHOOL PROPERTY A PROVISION READING AS FOLLOWS:

THE APPLICANT WILL ASSUME EXCLUSIVE CONTROL OF THE PREMISES ABOVE DESCRIBED DURING THE PERIOD APPLIED FOR AND PROVIDE GENERAL LIABILITY INSURANCE IN STANDARD FORM PROTECTING THE BOARD OF EDUCATION AGAINST ANY LIABILITY WHATSOEVER OCCASIONED BY ACCIDENT, DISASTER OR OTHERWISE OCCURRING ON THE PREMISES DURING THE TERM ABOVE APPLIED FOR, SUCH INSURANCE POLICY TO BE IN THE MINIMUM AMOUNT OF $100,000.00 FOR ONE ACCIDENT AND $50,000.00 FOR ANY ONE PERSON.

YOU STATE THAT IN ORDER TO ACCOMMODATE THE LARGE NUMBERS OF COMPETITORS WHO ENTER THE MORE POPULAR EXAMINATIONS YOUR COMMISSION HAS FOUND IT ESSENTIAL TO HAVE ACCESS TO SCHOOL FACILITIES INASMUCH AS EXAMINATION ROOMS IN POST OFFICES USUALLY HAVE A RELATIVELY SMALL CAPACITY. CONSEQUENTLY, YOUR COMMISSION WISHES TO PAY FOR SUCH LIABILITY INSURANCE WHEN IT IS REQUIRED IN ORDER TO OBTAIN THE NEEDED PREMISES.

FURTHERMORE, IT IS STATED THAT THE COMMISSION BELIEVES AS A MATTER OF POLICY THAT IT SHOULD NOT REQUIRE APPLICANTS TO TAKE TESTS IN FACILITIES WHERE NO INSURANCE PROTECTION IS PROVIDED. CONSEQUENTLY, IN THE EVENT THAT THE ONLY FACILITY REASONABLY AVAILABLE WAS A SCHOOL WHICH DID NOT CARRY LIABILITY INSURANCE FOR SUCH USE, YOUR COMMISSION HAS CONCLUDED THAT IT SHOULD, IF POSSIBLE, PROVIDE SUCH INSURANCE EVEN IF THE SCHOOL BOARD DID NOT INSIST.

IN VIEW OF THE ABOVE, YOU PRESENT FOR OUR DECISION THE FOLLOWING QUESTIONS:

1. IS PAYMENT OF THE COST OF LIABILITY INSURANCE AUTHORIZED COVERING THE OWNERS OR TRUSTEES OF NEEDED FACILITIES FOR A CIVIL SERVICE EXAMINATION WHEN SUCH INSURANCE IS A REQUIRED CONDITION FOR THE USE OF THE FACILITIES?

2. IS PAYMENT AUTHORIZED WHEN THE ONLY ADEQUATE AND AVAILABLE FACILITIES ARE NOT COVERED BY SUCH INSURANCE, EVEN THOUGH THE INSURANCE IS NOT A REQUIRED CONDITION FOR USE OF THE FACILITIES?

AS INDICATED IN YOUR LETTER, IT IS A SETTLED POLICY OF THE UNITED STATES TO ASSUME ITS OWN RISKS AND THE ESTABLISHED RULE IS THAT, UNLESS EXPRESSLY PROVIDED BY STATUTE, FUNDS FOR THE SUPPORT OF GOVERNMENT ACTIVITIES ARE NOT CONSIDERED AVAILABLE GENERALLY FOR THE PURCHASE OF INSURANCE AGAINST TORT LIABILITY OR TO COVER LOSS OF OR DAMAGE TO GOVERNMENT PROPERTY. COMP. GEN. 798. THIS RULE IS PREDICATED ON THE THEORY THAT THE MAGNITUDE OF THE GOVERNMENT'S RESOURCES MAKES IT MORE ADVANTAGEOUS FOR THE GOVERNMENT TO CARRY ITS OWN RISKS THAN TO HAVE THEM ASSUMED BY PRIVATE INSURERS AT RATES SUFFICIENT TO COVER ALL LOSSES, TO PAY THEIR OPERATING EXPENSES AND TO LEAVE SUCH INSURERS A PROFIT.

THIS POLICY, OF COURSE, NOT BEING ONE OF STATUTORY LAW CAN HAVE NO APPLICATION IN A CASE WHERE, AS A CONDITION TO THE GOVERNMENT'S USE OF PRIVATELY OWNED PROPERTY, THE OWNER THEREOF REQUIRES THAT THE GOVERNMENT TAKE OUT INSURANCE COVERING TORT LIABILITY AND LOSS OR DAMAGE TO THE PROPERTY. ACCORDINGLY, THE QUESTION FIRST PRESENTED IS ANSWERED IN THE AFFIRMATIVE.

WHILE THE DECISIONS IN WHICH THE GENERAL RULE STATED ABOVE HAS BEEN APPLIED USUALLY HAVE INVOLVED GOVERNMENT-OWNED PROPERTY, THERE IS PERCEIVED NO VALID REASON WHY SUCH RULE SHOULD NOT BE EQUALLY APPLICABLE IN A CASE WHERE THE GOVERNMENT IS PERMITTED TO USE PRIVATELY OWNED PROPERTY WITHOUT ANY REQUIREMENT BY THE OWNER THAT INSURANCE BE CARRIED THEREON. THE PAYMENT OF INSURANCE PREMIUMS UNDER THOSE CIRCUMSTANCES COULD HARDLY BE SAID TO BE A NECESSARY EXPENSE OF THE EXAMINATION PROGRAM. CONSEQUENTLY, IT IS OUR VIEW THAT APPROPRIATED FUNDS MAY NOT BE USED TO PROCURE SUCH INSURANCE AND YOUR SECOND QUESTION, THEREFORE, IS ANSWERED IN THE NEGATIVE.