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Brian S. Smith is an insurance professional with the Insurance Office of America in Atlanta, GA. He incorporates a process called “Risk Reconnaissance” which is a comprehensive method of uncovering corporate risks and insurable gaps. His work has a focus on government & defense contractors, specializing in Defense Base Act insurance. In addition to blogging, Brian hosts the Risk GovCon Podcast and is one of the founders of Atlanta GovCon.

  The image above published in Vanity Fair, this image portrays US Government Contractors in Sudan-https://www.vanityfair.com/news/business/2014/04/g4s-global-security-company

 

DBA Insurance is made out to be some sort of complex policy that few agents or brokers are familiar with unless they work with government & defense contractors.  To assist in breaking down a few myths, listed are 30 commonly asked questions on DBA Insurance that may clear the air a bit.  Visit https://theriskrecon.com for more details on the defense base act. 

Interested in a quick quote, visit https://www.theriskrecon.com/dba-insurance-quick-quote/

  1. What is Defense Base Act insurance and who must obtain it? DBA Insurance is workers’ compensation insurance.  The difference is it is intended for civilian 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, 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?   “Public work” is defined in the Act as any fixed improvement or any project, whether or not fixed, involving construction, alteration, removal or repair for the public use of the United States or its allies. However, “public work” is not limited to construction. It includes any project or operation under service contracts and projects in connection with the national defense or with war activities.
  4. Our contracting officer indicated DBA insurance was not required under our contract.  Are we still considered liable if they told us this? If the Act applies, then Yes.  Your company is still required to obtain Defense Base Act insurance.  The only party responsible for securing coverage is the contractor.  Not responsible for obtaining coverage include the insurance agent or broker; The contracting officer; The contracting agency; The Department of Labor; The State Assigned Risk Pool.  Ultimate liability will fall under the contractor.
  5. Should we consider other insurance in addition to Defense Base Act insurance? Although optional, it is a wise consideration.  Additional insurance programs that routinely compliment, although are not required under the Act include, Business Travel Accident, Kidnap & Ransom, and Life Insurance (with war),
  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 the injury or death of (1) an employee subject to the provisions of the Federal Employees’ Compensation Act; (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. Therefore, employers should secure insurance coverage 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 (local hires), and third country nationals (hired from another country to perform work in the host country).  I wrote this article because this is one of the top 30 commonly asked questions on DBA Insurance.
  9. We work in Puerto Rico, a US Territory; are we required to have DBA insurance? Yes, Puerto Rico is covered under the Defense Base Act as part of its scope.
  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) from a reimbursement perspective, will be defined in the terms of the contract.
  12. When is Defense Base Act insurance needed? 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 workout, does that subcontractor have to have their own DBA insurance or can they be covered under ours? They must have their own.  DBA Insurance is intended for those workers for a company that is under their payroll and is doing the work themselves.  The sub-contractor cannot pass down the work to a sub-sub-contractor and have them covered under their DBA insurance.  The insurance requirements under the DBA require 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 insurance, but not DBA.) Private Insurance Programs may supplement but cannot substitute for mandatory DBA coverage.  Supplemental insurance may be considered in 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?  If you made it this far on the 30 commonly asked questions on DBA Insurance, good for you.  You are halfway there.  In short, whenever an overseas contract is awarded, DBA insurance must be considered.  DBA insurance must be provided to civilian 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. Is Defense Base Act insurance required for a quick, short term contract? There is no exception for the provisions of the Act for a “short trip” overseas,  for “only attending a meeting”, by an executive (“not a worker”), “overseeing, not working”.
  17. The owner or CEO is excluded under our Workers’ Compensation insurance policy.  Does the owner or CEO fall under the Defense Base Act insurance requirement? Even a CEO is an employee under the Act, and all employees are covered.
  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.  There are no short-term policies available that would limit the time in which the coverage would be active 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 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 and if so, does apply to all under the contract? Waivers may be provided to employers after review and approval from the Department of Labor.  When requesting a waiver, it should NOT be sent by the insurance broker, the contractor, or the contracting officer.  It must be submitted by the employer.  The waiver will only cover workers who are covered by another national or provincial workers’ compensation act for the entirety of their claim, without exclusions for war risks, nuclear biological, chemical, radiological or other exclusions.   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.  30 commonly asked questions on DBA Insurance addresses additional information on this one below.
  22. Would we need one than one Defense Base Act insurance policy if we have multiple contracts in place? Multiple task orders may be covered under one policy if the insurance company agrees.  In some cases, multiple contracts may be assigned, by endorsement, to one policy.  If contracts vary in scope, location, and operation, then multiple policies may be needed.  Further, your insurance and contract department may elect to provide insurance for one contract with one policy for easier accounting. If your company has concurrent contracts with different federal agencies, it is quite possible that workers for the same employer may be injured in the same incident and be covered by different insurance policies (USAID)
  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.  Some insurance companies may add Kidnap & Ransom coverage to a DBA insurance policy, but the terms and limit should be reviewed.
  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), additional travel during breaks, etc.  It is intended to provide benefits for injuries and lost wages due to work-related conditions.
  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.  Here is a current list of approved insurance companies that may offer coverage. Insurance Carrier List
  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 work of the contract, each insurance company has an underwriting appetite or level of comfort, when it comes to the types of risk they are willing to represent.  The higher the risk, the fewer the willing insurers there may be that will 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 does the Defense Base Act apply to? 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 with any U.S. government agency, including construction and service contracts in connection with national defense or with war activities outside the United States; Work on contracts approved and funded by the U.S. 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 such 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 anyone 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. https://www.dol.gov/owcp/dlhwc/ExplainingDBA.htm
  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? The last question of the 30 commonly asked questions on DBA Insurance…An employer who fails to secure the payment of compensation under the Act 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 employer is a corporation, the president, secretary and treasurer can be prosecuted individually and may be personally and severally liable for compensation and other benefits. If the employer is not insured, an injured employee also may elect to either claim compensation under the Act or sue for damages for his/her injury 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.

If you have any questions about 30 commonly asked questions on DBA Insurance contact Brian Smith at (404) 918-4775 or brian.smith@ioausa.com. or visit www.theriskrecon.com