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DEFENSE BASE ACT INSURANCE
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RISK GOVCON PODCAST



30 Frequently Asked Questions about DBA Insurance


1.  What is Defense Base Act insurance and who must obtain it?
DBA Insurance is workers' compensation insurance for employees working outside the United States on US military bases or under a contract with the U.S. government for public works or for national defense.  Must be obtained by Employers, Subcontractors, and Subordinate contractors.
2.  Is there a legal way to avoid purchasing Defense Base Act insurance?
Yes.  Waivers are permitted and granted for local workers, however if no local workers' compensation laws exist, the waiver has no effect and Defense Base Act insurance must be secured.  https://www.dol.gov/owcp/dlhwc/dbawaivers/dbawaivers.htm
3.  What is Public Work?  
The term "public work" means any fixed improvement or any project, involving construction, alteration, removal or repair for the public use of the United States or its allies, including but not limited to projects or operations under service contracts and projects in connection with the national defense or with war activities, dredging, harbor improvements, dams, roadways, and housing, as well as preparatory and ancillary work in connection therewith at the site or on the project;
4.  Our contracting officer indicated DBA insurance was not required under our contract.  Are we still liable if our work meets the criteria US Contract work outside the US?
Yes, if your contact meets the criteria of a government contract with work outside the United States.  Ultimately the contractor is responsible for any liability associated with their work, not the KO.  Even KO's can be wrong. 
5.  Should we consider other insurance in addition to DBA insurance?
Yes.  Additional insurance programs that compliment, although are not required under the Act include, Business Travel Accident, Kidnap & Ransom, and Life Insurance (with war) if available.
6.  What does DBA provide in the form of "Benefits"?
The Defense Base Act provides disability and medical benefits to covered employees injured in the course of or arising from employment and death benefits to eligible survivors of employees killed in the course of employment or who died of causes arising from employment.
7.  To whom and when does the Defense Base Act NOT apply?
The Defense Base Act does not apply to injury or death of (1) a federal employee (2) an employee engaged in agriculture, domestic service, or any employment that is casual and not in the usual course of the trade, business, or profession of the employer; and (3) a master or member of a crew of any vessel.
8.  Does DBA only apply to US Citizens?
No.  It applies to all paid workers associated with the contract.  Third-Country Nationals, Local Nationals - Benefits under the DBA are payable regardless of nationality.  Employers should secure insurance for all of their employees working outside the United States under a U.S. government contract, including U.S. citizens and residents, host country nationals (locals), and third country nationals (hired from another country to perform work in the host country).


​​​​​​​9.  We work in Puerto Rico, a US Territory; are we required to have DBA insurance?
Yes, work in Puerto Rico must be covered under DBA Insurance.
10. Are grants required to secure Defense Base Act insurance?
Grants work performed pursuant to a grant or cooperative agreement is not covered under the Act.


​​​​​​​11. Is Defense Base Act Insurance a reimbursable expense under the contract?
The cost of insurance premiums may be reimbursed if it stipulates repayment under the contract.  Cost-plus contracts are likely, however fixed cost contracts will not respond to reimbursement.
12. When is Defense Base Act insurance a mandated requirement?
DBA insurance must be provided to employees working outside the United States on US military bases or under a contract with the U.S. government for public works or national defense.
13. Are subcontractors required to have Defense Base Act insurance?  If they sub the work out, does that subcontractor have to have their own DBA insurance or can they be covered under ours?

Sub contractors have to obtain their own insurance, unless the insurance company for the prime agrees to pick up the sub contractors as part of the DBA insurance program.  The insurance under DBA requires every employer (including contractors and subcontractors) either to secure insurance for the payment of workers' compensation benefits provided under the Act or to be permissibly self-insured. If a subcontractor fails to secure the payment of compensation, the contractor will be liable and will be required to secure the payment of such benefits.

14. What can be used in lieu of DBA insurance from a program perspective?  (We already have workers' comp or personal accident cover, but not DBA.)
Private Insurance Programs may supplement, but cannot substitute DBA coverage.  Supplemental insurance may be an addition to DBA, such as life insurance for relatives not covered as dependents under the Act as these benefits are separate from the DBA program.


​​​​​​​15. When is Defense Base Act insurance needed?
In short, whenever an overseas contract is awarded, DBA insurance must be considered and provided to employees working outside the United States on US military bases or under a contract with the U.S. government for public works or for national defense.
16. I'm only going overseas for a week.  Is DBA insurance required?
There is no exception for the provisions of the Act for a short trip overseas,  or for only attending a meeting if it is part of the contract work.


​​​​​​​17. If our company owner or CEO is excluded under Workers' Compensation insurance, does the owner or CEO have to be included on our Defense Base Act insurance?
Yes.  Even a CEO is an employee under the Act.  All employees must be covered if performing work under the awarded contract requiring Defense Base Act insurance.
18. Can we purchase Defense Base Act insurance for a period less than a year, such as a one-month contract?
The coverage will be in place for one year.  Short-term policies are not available limiting the term for less than one year.
19. Defense Base Act insurance is not required for government contract work in the US.  Where would the coverage apply?
Employees working outside the United States on US military bases or under a contract with the U.S. government for public works or for national defense.  Puerto Rico and Guam (waived) are included although they are US Territories.
20. Why is DBA insurance required on our contract even though it is not specified in the insurance section of the contract?
Just because it isn't there, doesn't mean it isn't required.  Not all contracts drafted by the US Government are worded the same way.  Regardless if the Defense Base Act insurance requirement is listed or not, it is the responsibility of the contractor, subcontractor, or subordinate contractor to verify its need under each contract award. 
21. Can we obtain a DBA insurance Waiver for our contract work? If so, does it apply to all wunder the contract?
Waivers may be provided after Department of Labor review.  When requesting a waiver, it must be submitted by your company (the employer. 

The waiver only applies to workers who are covered by another national or provincial workers' compensation act for the entirety of their claim.  

It is Department of Labor policy that waivers do not apply to citizens or legal residents of the U.S. or to employees hired in the U.S. Waivers are granted for local workers, however if no local workers' compensation laws exist, the waiver has no effect and DBA must be secured
22. Would we need more than one Defense Base Act insurance policy if we have multiple contracts in place?
In some cases, multiple contracts may be endorsed to one policy.  If contracts vary in scope, location, and operation, then multiple policies may be needed.  Always ask.  This will save a lot of time when pursuing multiple contract opportunities.
 
Multiple task orders may be covered under one policy if the insurance company agrees.
23. Does Defense Base Act insurance include coverage for Kidnap & Ransom?
No*.  Kidnap & Ransom coverage is obtained separately from the Defense Base Act insurance program. 

​​​​​​​Note* AIG offers a Kidnap & Ransom endorsement to DBA insurance.


​​​​​​​24. Is Defense Base Act insurance considered "24 hour coverage"?
No.  Although DBA insurance is active during all periods of work, it does not cover outside activities, such as excursions, periods of rest & relaxation (R&R), or additional travel during breaks, etc.  It is intended to provide benefits for injuries and lost wages due to work related activities. 
25. Why doesn't our current insurance company want to provide Defense Base Act insurance?
Although many insurance companies throughout the US are able to provide the insurance, many have decided not to. 


​​​​​​​26. Can Defense Base Act insurance have a deductible attached to it so the premium will be lower like our current workers' compensation plan?
No.  All DBA policies are without deductibles and are considered "Guaranteed Cost"
27. When we applied for Defense Base Act insurance through our insurance professional, we only received one quote.  Why?
Depending on the type work involved, each insurance company has an underwriting appetite when it comes to insuring risk.  The higher the risk, the fewer insurers offer a quote.
28. How do we know if our subcontractor or prime contractor currently has Defense Base Act insurance?

Your contracts or administration department should request a certificate of insurance from the subcontractor or prime.  The certificate will list the carrier, expiration date of coverage and policy number.  It is important to verify the coverage is in place by contacting the insurance company.


​​​​​​​29. What employment activities apply to the Defense Base Act ?
Work for private employers on U.S. military bases or on any lands used by the U.S. for military purposes outside of the United States, including those in U.S. Territories and possessions; Work on public work contracts , including construction and service contracts in connection with national defense or with war activities outside the United States; Work on contracts under the Foreign Assistance Act, which among other things provides for cash sale of military equipment, materials, and services to its allies, if the contract is performed outside of the United States; Work for American employers providing welfare or similar services outside the United States for the benefit of the Armed Services, e.g. the United Service Organizations (USO); and Any injury or death occurring to any  employee during transportation to or from the place of employment, where the employer or the U.S. provides the transportation or the cost thereof.

If any one of the above criteria is met, all employees engaged in such employment, regardless of nationality including U.S. citizens and residents, host country nationals and local hires as well as third country nationals (individuals hired from another country to work in the host country), are covered under the Act.


​​​​​​​30. What is the worst thing that could happen if our company doesn't obtain Defense Base Act insurance, but is required to do so?

A company who fails to obtain coverage through an insurance carrier or to obtain authorization to be self-insured may face criminal prosecution and be subject to imprisonment and/or fines. If the company is a corporation, the president, secretary and treasurer can be prosecuted individually and may be personally and severally liable. 

If your company is not insured, an injured employee can either claim compensation under the Act or sue for damages under general tort law. In such a lawsuit, the employer may not rely on the customary tort defenses that the employee is prevented from recovery by (1) his/her own contribution to the cause of the injury or (2) his/her own negligence or wrong-doing.

Furthermore, your company would be considered contractually non-compliant and could jeopardize performance standing and future contract awards.

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All professionals associated with Risk Reconnaissance are engaged insurance experts with the Insurance Office of America
Insurance Office of America
100 Galleria Parkway
Suite 600
Atlanta, GA 30339
(770) 250-0227 (Office)
​​​​​​​(404) 918-4775 (Cell)
brian.smith@ioausa.com
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