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Road to Recoveries RisKey
A Guide to Managing Losses Below the State Property Deductible
Your agency has suffered a property loss. The cost to repair or replace the damaged property is *2,500 or less. That means your agency’s loss falls within the state self-insurance property deductible limit. Well, what does that mean? It means that this property loss is yours to manage without intervention from the Risk Management Division. If a third party caused the property loss, it is your agency’s responsibility to try and get the third party to pay for your loss. This RisKey will help you identify program components and provide links to references that will assist you in this endeavor.
These are program components that your agency will need to establish:
  • Property Loss Administration
  • Recoveries from Third Parties
  • Collection Options
  • Write Off or Compromise of Debt
  • Accounting Practices
  • Cash Management
Your agency may already have one or more of these components in place for other business needs. If so, talk to the managers to see if they can handle property loss recoveries.

Property Loss Administration
The property loss administration procedure consists of the following steps:
  • Report Losses
  • Protect Damaged Property
  • Investigate the Facts
  • Evaluate and Resolve
  • Track Losses
  • Repair Option Tips
Report Losses
Establish a process for your agency to report state property losses under the deductible limit. It can be the same process that you currently use for state property losses above the deductible limit. You can use the same report form from the Risk Management Division website to report your property losses. But if the loss is $2,500 or less, do not send it to us. Your agency must handle it.
As you establish your property loss reporting process:
  • Determine whether the function will be centralized or de-centralized.
  • Identify the person(s) who will handle this function for your agency.
  • Publish reporting standards.
  • Specify what needs to be reported, when and to whom.
  • Decide what documentation that you will require. The documentation should include photographs, estimates, names and addresses of witnesses, insurance information, etc.
  • Establish tasks and time frames for processing.
Protect Damaged Property (Duty to Mitigate)
Take steps to prevent further damage to your property. If a vehicle window is broken and you leave the vehicle in your parking lot without taping plastic over the window, any rain damage may be your responsibility. The insurance company for the liable party may not pay you for rain damage that occurred days after their insured broke your vehicle window. The courts may not hold the liable party that damaged your property responsible for costs that you could have reasonably prevented. Remember to document what you do to mitigate further loss. This documentation could include both written entries and photographs.
Here are some examples of reasonable actions to protect your damaged property:
  • Vandalized window, door or door lock allowing access to your building. Secure the opening or post a watch until this opening is secure. The cost of this action may be recoverable if the damage could not be immediately repaired.
  • Vandalized vehicle window or locks allowing access to your vehicle. Protect from rain and similar risks. Do not leave personal property unattended in the vehicle.
  • Vandalized vehicle ignition. Secure the vehicle in an area where it is unlikely to be started and stolen, remove the distributor cap, chain and lock the steering wheel, or otherwise prevent its theft.
  • Any damage that could entice or endanger children or others. Board up, install ropes, barriers, florescent tape, or use other means to keep all people away from danger.
  • Damage to equipment. Disconnect all possible power sources. Tape over plug so it cannot be placed in electrical outlet. Disconnect and disable engine to avoid accidental start-up, i.e., lockout/tagout.
  • Towing a vehicle. Have your vehicle towed to your agency if the damage makes that a reasonable option. If towed elsewhere, determine storage costs and options. It is important to get the damaged vehicle to a shop as soon as possible. If it is a total loss, the vehicle needs to be taken to the salvage yard at state surplus. Insurance companies will not pay for unnecessary storage costs. Those unnecessary costs will also be deducted from the salvage value that you receive for a totaled vehicle.
After the loss has been reported, you need to investigate the facts leading to the loss. This investigation involves gathering information about:
  • The incident or other event causing the loss.
  • The extent of the damage or harm.
  • The possible legal liability of any party for having caused the damage or harm.
  • Any potential sources of payment, collectible from others, to pay for the damage or harm.
  • Any responsibility for property that belongs to anyone other than the state.
The purpose of the property loss investigation is to:
  • Obtain information from witnesses and agency personnel.
  • Gather pertinent documents - fire and police reports, records of ownership or control and responsibility for damage.
  • Obtain any physical evidence.
  • Obtain any other facts.
The investigation process is necessary for the documentation, evaluation, and resolution of each loss. The circumstances, causes and extent of a loss are vital pieces of information for the prevention of similar incidents. A standardized "incident" report form to gather pertinent information is helpful to this process. It provides a place for you to consolidate any documentary or verbal statements and material objects that provide evidence of liability.

Evaluate and Resolve
The first question that you should ask, even before an incident happens, is "Who owns or is responsible for the property?" Read pertinent leases, agreements, or contracts. You may find that another person or state agency may be responsible for repair or replacement of your damaged property. Or, you may find that your agency is responsible for the loss. Review your agency’s activities. Are you responsible for property of employees? Do you lease or rent vehicles? Do you have exposures that are unique to your agency? Don’t let unanticipated exposures increase the frequency of your losses.
Evaluate each loss on its own merit. Determine how the facts of the loss relate to law and damages. A basic principle of common law is that a person or organization whose conduct harms another should be held financially responsible for that harm and should not be relieved of this responsibility because the victim has other sources of compensation. To establish a legal right to recovery you must have evidence that shows the third party is responsible for your damages.
You must pursue recovery if you conclude that a third party has negligently caused the damage. If you share part of the negligence, your right to recovery will be reduced and your efforts may be complicated. To collect from the negligent party, they must be more than 50% negligent. If they are less than 50% negligent, you cannot collect. If you have any questions about this "call", contact your DOJ General Counsel or the Risk Management Division at (503) 373-7475.
If another state agency is responsible for the damage, contact them directly to resolve the loss. It is always a good idea to have an interagency agreement in place to establish responsibility, prior to any loss that occurs.
If your agency is responsible for the property damage, determine which division, section, unit, etc. in your agency will pay for the loss.
The value of a property loss should be evaluated based on information about the condition and the use of the property before the loss and on alternatives for repairing or replacing the property.
Loss settlement for property losses above the deductible limit (state self-insurance property coverage) are determined as follows:
  • Payment for losses is equal to the cost of restoration.
  • The restoration cost is the lesser of the cost to repair or replace in conformance with state purchasing rules or state price agreements.
  • The self-insurance property policy manual outlines methods used to determine the restoration cost for various types of property.
Track Losses
You should establish a database for your property loss data. This will also assist your agency to track losses, produce reports, identify loss trends, forecast losses, and determine the effectiveness of your loss control activities. It could also tell you who caused the loss, whether you could collect and if your collection actions were successful.
The Risk Management Division has developed a Property Loss Database template in Access. If you would like a copy of this database to track your losses, contact the Risk Management Division at (503) 373-7475. We will be happy to send you a copy.

Repair Option Tips
You know the importance of checking more than one vendor for any purchase of goods or services, as all agencies must follow state purchasing rules. Here are a few tips on repair options:
  • Broken vehicle glass. Use an auto glass shop, not a body shop. Glass shops are nearly always lower in cost. Most body shops will hire the glass shop and tack on their own mark-up. Check your yellow pages. If you must use a body shop, ask for a discount.
  • Chipped windshields. There are low cost injection techniques available. A window can be fixed for just a few dollars.
  • Damaged equipment. Check your warranty. If the equipment is still under warranty, use an authorized repair shop.
  • Any damage. Check in-house repair options from the Department of Administrative Services or your own agency.
  • Building damage. Consider any remodeling plans. You should not necessarily replace a broken window where you plan to install a solid wall next month.

Recoveries from Third Parties
When to Pursue Recovery
The state’s policy is to collect all receivables, i.e., amounts owing to the state, due its various agencies and to establish procedures to effect the timely collection of all amounts owed.
Agencies are required to actively and aggressively pursue the collection of all receivables owed to the state that are material and cost beneficial. Agencies must know and comply with all applicable federal and state laws and guidelines in consumer debt collection efforts, and specifically, the Oregon Unlawful Debt Collection Practice Act in ORS 646.639. Aggressive collection using all applicable collection methods included in the Oregon Accounting Manual may not be cost justified for receivables under $100.
State law (ORS 293.231) requires that certain liquidated and delinquent accounts be turned over for collection within certain time periods (See OAM 35.60.10).
ORS 291.015 specifies the fiscal responsibilities of the Department of Administrative Services and the delegation of such fiscal functions. Your agency will need to review and follow the Oregon Accounting Manual and agency guidelines to insure compliance with collection policies. The Oregon Accounting Manual instructs agency staff to read, understand, and follow the various federal and state laws regarding legal collection practices.
Many agencies already have business systems in place to legally collect, account for and report collections. If you need assistance with issues, contact the State Controller’s Division, Department of Administrative Services at (503) 378-3156.

Establish Your Recovery Process
As you establish your recovery process, determine whether the process will be centralized or de-centralized. We strongly suggest that this process be centralized in your agency to maintain control, promote consistency and strengthen technical knowledge. You may or may not use the same person to pursue recovery that you use to process property losses.
The difficulty in collecting from liable third parties varies with each property loss. In the majority of cases, the collection is relatively simple and consists of providing the third party’s insurer with proof of damages and a request for payment. Most of the recovery work is accomplished with the use of form letters. A small percentage of losses involve more complex liability issues.
The following guidelines should assist you in your decision to pursue recovery from a third party.
  • Recovery should be pursued when:
    • A third party is responsible for the damages.
    • Probable recovery exceeds the cost of recovery efforts.
    • The responsible party has the ability to pay.
  • Recovery is questionable when:
    • Liability is not clearly established.
    • It may elicit a valid counter claim.
    • Sensitive issues are involved.
    • The cost of recovery is equal to or more than the amount to be recovered.
Prove and Support Your Loss
To successfully recover, you must be able to prove your loss and establish liability against the third party who caused damage to your property. Proving your loss is critical. You must be able to present documentation to prove your damages. This documentation should be in the following form:
  • Final repair bill.
  • Competitive repair estimates – at least two.
  • Appraisals by a qualified individual, for example, when your vehicle is not in drivable condition.
  • Photographs of the damage.
To establish a legal right to recovery, you must have evidence that shows the third party is responsible for your damage. The percentage of damages you may be able to recover are dependent on comparative negligence. Note: In comparative negligence, a claimant cannot benefit from his or her wrong. To collect in court, the claimant must be 50 percent or less negligent. If the claimant is found to be more than 50 percent negligently responsible for his or her own injury or property damage, there is no financial recovery in court. This is the standard that is used in the State of Oregon and is applied by insurers for the adjustment of claims.
Some property losses will be very clear as to responsibility, and your request for payment will not be contested. Others may be more unsettled and require additional investigation to sort out the underlying facts. Documentation that may help to establish liability include:
  • Accident reports signed by parties
  • Witness reports signed by witnesses
  • Police reports
  • Signed, written, or recorded statements
  • Photographs
  • Accurate diagrams
Once liability is clearly established against the third party, contact should be pursued as soon as possible.

Seek Recovery
In general, clear, written internal procedures are one of the most important steps you take to effectively collect from liable third parties. A collection letter must be sent before any legal action can be taken to collect the debt.
Collection letters should be simple and concise, with only a few short paragraphs or sentences. The severity in the tone of the letter should increase the longer the debt remains outstanding. When you develop collection letters, it is important to use a business letter format and to ensure that the content is written using professional language that is easily understood by the reader. All letters should be on agency letterhead and should include the full name and address of the debtor. Include pertinent information such as date of loss, vehicle information, location of loss, type of loss, loss details, insured party information, etc.
Send your letters to the insurance company to request payment for damages. (In some cases, the insurance company will initially contact you.) If the insurance company does not respond to your request for payment of damages, or you don’t know who the insurer is, send your letter to the liable third party. It is important that they are aware that their insurance company is not responding. They can put pressure on their insurer to pay and stop any collection efforts by your agency. Document all contacts made for recovery. Seek to recover all losses within 90 days. Your records may be subject to audit by the Secretary of State and the Risk Management Division.
Letters to the Insurer
  • Notice of Subrogation
This is the first letter to the insurance company to request payment of damages. Generally, payment will be made after the first letter unless there is a dispute about who is actually at fault. If the insurance company blames you, notify us so we may act on their claim against your agency.
This will serve as notice against your insured (name of insured) for damage to state property.
Please send your check in the amount of (indicate dollar amount), payable to (name of state agency and address of state agency).
  • Second Request for Reimbursement
This is a reminder letter to the insurance company for payment.
We have not received a reply to our letter. This letter is our second request for payment of (indicate dollar amount) to repair state property.
Please send your check in the amount of (indicate dollar amount), payable to (name of state agency and address of state agency).
Letters to Individuals
  • Request for Information
This is an initial contact letter to request basic insurance information.
It has been reported that you were (in an accident that involved a state vehicle OR responsible for damage to state property) on (date of loss).
Please send us the following information: (1) Name, address and telephone number of your insurance company or agent, and (2) Policy number.
We will deal with your insurance company unless you specifically request other arrangements. Thank you for your assistance.
  • Damage Notification
This letter may be used for your initial contact. Usually it is used as a follow-up letter. It requests payment for the damage to state property from the third party and provides actual costs with supporting information.
Our records show that you are responsible for damage to state property. If you are insured, please send this letter and attachments to your insurance company and ask them to contact me.
This is our request for payment of (indicate dollar amount). Please make your check payable to (name of state agency) and send it to (name and address of state agency).
  • Second Request for Payment
This letter has a slightly stronger tone and is used when there is no response to the first request for payment
We have not received your payment for damage to state property as previously requested. Please contact your insurance company or make arrangements with our office for payment.
  • Final Demand for Payment
This letter may be used when there is no response to prior letters. However, use care in demanding payment from an uninsured wrongdoer. They may take offense to the way in which you state your message.
Statements about intended actions should not be made unless the agency intends to carry them out. For example, if the letter indicates that the account will be forwarded to a collection agent if payment is not received by a certain date, this action must be taken by the date expressed in the letter. Mail this letter Certified – Return Receipt Requested.
We have not received a reply to our letters.
This will serve as our ten-day demand under ORS 20.080. We are demanding (indicate dollar amount) for damage you caused to state property. Please call or write within ten (10) days from the date of this letter. If you do not respond, this matter will be turned over to (indicate intended action).
  • Confirmation of Payment Agreement
When a payment schedule is agreed upon to satisfy a debt, a written confirmation of the agreement is always a good idea.
The cooperation you have shown by making satisfactory payment arrangements is appreciated.
We rely on your commitment for an initial payment of (indicate dollar amount) and fulfillment of your agreement that it will be received no later than (month, day, year). (Number of additional payments) additional payments will be expected by the agreed upon schedule of (indicate dollar amount) by the (date) of each month.
Failure to comply with the terms of this agreement will require our taking immediate action.

Collection Options
Collection of Debt Due to Negligence
When recovery from an individual or their insurance company is unsuccessful, use other collection mechanisms. Review the collection policies found in the Oregon Accounting Manual as well as your own authorizing statutes for specific authority. Some agency’s statutes provide greater collection actions than are made available by general statutory provisions.   The decision of what option to use will depend on the individual facts of each property loss and each agency’s specific authority. General collection options include:
  • Department of Revenue - Other Agency Accts.
  • Private Collection Firms
  • Credit Reporting Bureaus
  • Statutory Mechanisms
  • Small Claims Court
  • Department of Justice - Civil Enforcement Division’s Credit and Bankruptcy Section
  • Alternative Dispute Resolution
Additional Risk Management Tips
  • Small Claims Court
It is best to get a judgment from small claims court first. It will save time if you have to use additional collection options. Talk to the Department of Justice to see if your agency has the authority to go to small claims court themselves.
  • Department of Justice:
Use on larger losses when the probable recovery is sufficient to cover costs. Also consider this option when the liability is reasonably clear, but a dispute exists on degree of negligence or amount of damages. Provide a copy of your file, to include details of liability, damages and any payment(s). In cases where the damages are $4,000 or less, the Department of Justice will be able to recover their fees under ORS 20.080.
  • Department of Revenue
Use only when the debtor lives within the state. The Department of Revenue will not collect from out-of-state debtors.
Collection of Debt Due to Intentional/Criminal Act
In most property losses, the offending party is unknown. However, on occasion, the party has been identified and admits to, or is found guilty of the act by a court of law. Common examples are state property losses involving theft, vandalism, or hit and run.   The District Attorney’s office will decide to prosecute the case against the offending party based on the facts presented. Some counties have a Victim’s Assistance Program that assists crime victims. Each can petition the court to order an individual to pay restitution. If there are no suspects, you should work directly with the Police Department. Inform them of your financial interest as a result of your loss. (Note: Your file can then be closed. If the offending party is later identified, re-open your file.)   When you request a restitution order, immediately send a letter to the prosecuting District Attorney. This letter should request a restitution order to cover the costs of repair, if the person is found guilty. It should include date of loss, name of suspect, charge and description of incident. This initial contact helps to insure that your agency has a chance to demand restitution. If the suspect has already been to trial, this opportunity is missed. If the court orders restitution, depending on the county, you will receive monthly payments or a single payment after the suspect has paid in full to the county.   A follow-up letter to the District Attorney can provide the final repair costs and include copies of final invoices.
Examples of Letters
  • Letter to the District Attorney
The (name of agency) has sustained a (indicate dollar amount) loss for damages to state property.
Please mark your records to show the (name of agency), State of Oregon has a monetary interest in any ordered restitution. Our interest is (indicate dollar amount). Make check payable to (name of agency) at (address of agency).
  • Letter to the Police Department
The (name of agency) has sustained a (indicate dollar amount) loss for damages to state property.
If anyone is charged in connection with this case, please contact us prior to the hearing date, so we may provide our documentation for consideration.
The (name of agency), State of Oregon has a monetary interest in any ordered restitution. Our interest is in the amount of (indicate dollar amount).
When minors are involved, biological parents of an unemancipated minor child in their custody could be held liable for intentional or reckless torts committed by their child. See ORS 30.765.  

Write Off/Compromise of Debt
If you need assistance with write off or compromise of debt, contact your agency business manager or the State Controller’s Division. This is a complex area that will need special attention from each agency.

Accounting Practices
If you need assistance with your accounting issues, the Statewide Accounting and Reporting Services (SARS) of the State Controller’s Division provides professional consultation and training services.

Cash Management
Banking Services
Finally, your recovery efforts are successful. Your agency has received money from a third party to pay for damage to state property. So, what do you do with the money?
In state government, the Oregon State Treasury serves as the central bank. ORS 293.265, with very few exceptions, does not allow a state agency to have an account at a bank. Virtually all money that flows to and from Oregon State Government travels through the Cash Management Section of the Finance Division of the Treasury. The Cash Management Section utilizes a network of 20 Oregon banks where agency receipts are deposited into Treasury accounts.
Your agency will need to work with the Oregon State Treasury to establish banking services or to obtain assistance for the deposit of your recoveries.

Accounting and Financial Reporting: The State Controller’s Division offers professional consultation and training services to state agencies on accounting and financial reporting.
Banking Services: Contact the Oregon State Treasury for assistance with your banking services. A Cash Management Manual is also available.
Collections: The State Controller’s Division Web site offers information, training, and technical assistance to agencies on collections.
Generally Accepted Accounting Principles and Statewide Policy: The State Controller’s Division publishes generally accepted accounting principles and statewide policy via the Oregon Accounting Manual.
For questions regarding this RisKey, contact the Risk Management Division at (503) 373-7475.
New: 5/02
*State agencies with more than 20 Legislatively Approved Budgeted FTE (when rounded to the nearest whole number) will pay the first $2500 for each occurrence of loss to state owned property. Smaller agencies will pay the first $1000.