30 commonly asked questions on DBA Insurance

30 commonly asked questions on DBA Insurance

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 

How You Can Avoid Some of the Most Common Misconceptions About Life Insurance

How You Can Avoid Some of the Most Common Misconceptions About Life Insurance

Post written by Nicole Rubin of Insureabilities.com

Nicole Rubin worked in the health insurance industry for years. Every day she fielded questions from people concerning their coverage and medical bills. Through this, she learned a lot about how the industry works, the challenges health insurance companies face, and customer limitations.

Life insurance is one of those incredibly important parts of life, misunderstood by a surprising number of people. It’s an easy mistake to make. Insurance policies have confusing rules and regulations that can be difficult to understand. But actually, the truth might surprise you!

Thankfully, life insurance policies are far easier to manage than many people think. Not only are they straightforward, but they’re a lot more affordable and easy to understand when it comes to purchasing a policy. Let’s talk about some of the more common life insurance misconceptions so you can have an easier time picking the right policy.

Misconception: Life Insurance Isn’t Available to Most Seniors

While many think that it becomes increasingly difficult to get an affordable life insurance policy once you’re over the age of 60, this isn’t true. Of course, in later years, you will likely have to pay a higher premium and you’ll want to purchase a policy with a shorter term. There are plans that will still cover you in your senior years which can be a big help to your family and loved ones, in the event of your passing.

Keeping all of this highly organized is very important. You will want to make sure that sensitive documents (insurance paperwork/policies, will and testament, power of attorney documents, etc) are easily accessible.  Ensure family members can find them if tragedy should strike.

Life Insurance Isn’t as Expensive as You Think

Many people overestimate the cost of life insurance, and for good reason. Life insurance policies tend to pay out massive sums, so it follows that the premiums be sky-high too. However, many insurance policies cost less than $200 a year!

Life insurance is not as expensive as you think.  Take your time and shop for a policy that meets your personal needs. Consider an online life insurance policy comparison tool so that you can be sure you’re getting the best possible deal.

You Should Get It When You’re Young

Another common misunderstanding about life insurance is that if you’re young and in good shape, life insurance is an unnecessary expense. But remember, one doesn’t purchase life insurance for today, it’s purchased for tomorrow.

Another important thing to consider is, when you’re healthy and young, you’ll be able to access better coverage at a more affordable price. Looking for a policy when you’ve experienced some serious health issues can cost much, much more in terms of insurance premiums.

You never know what’s going to happen, making life insurance an important part of financial planning.  Ensuring your family and loved ones will be taken care, offers true peace of mind.  It’s important to recognize life insurance is not as complicated or expensive as it seems. With appropriate due diligence, you’ll find the perfect life insurance plan to meet your needs.

Part 2 An introduction to the Procurement Technical Assistance Centers

Are you a Prime or Sub-contractor interested in collaboration and more opportunities?  Chuck Schadl of the Georgia Tech Procurement Assistance Center, GTPAC, takes us on a 2-part journey covering important aspects of the Prime/sub-contractor partnership; 

  1. Requirements for the Prime/Sub-contractor relationship and
  2. The limitations placed on the sub-contractors engaged in government contracting.  

There are more than 90 Procurement Technical Assistance Centers throughout the United States intended to aid small business in the knowledge of government contracting. 

Check out this episode of the Risk GovCon Podcast

Yes, DBA Insurance needed in Puerto Rico!

Yes, DBA Insurance needed in Puerto Rico!

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.


Top 10 buying tips for Defense Base Act Insurance

Top 10 buying tips for Defense Base Act Insurance

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.
Top 10 buying tips for Defense Base Act Insurance that are going to build confidence and simply the purchase of your next DBA policy.

Where are Rates Going?

Before we get into the Top 10 buying tips for Defense Base Act Insurance let’s review a couple of insurance carriers. AIG and Allied World Assurance Company (Allied) have maintained flat rates for both renewals and new business policies requiring Defense Base Act Insurance.  Leading indicators continue to point toward a flat rate trend due to downsizing of U.S. Government Contracting presence throughout the Middle East.  Changes may occur in other regions that could potentially increase rates in Western Africa and South America.

Other Insurance Carriers – What are they doing?

Underwriters maintain a conservative posture when considering new DBA insurance programs.  This makes it more important to have the Top 10 buying tips for Defense Base Act Insurance.  A trend supported by negative loss histories of mandated insurance programs with fixed rates based on a list of standardized classifications. These included services, construction, security, and aviation.  Faced fixed rates for a wide variety of risks within these categories and unable to underwrite to specific conditions or loss factors, costs soared as claims outpaced premiums.  CNA and Zurich were victims of this trend, attempting to profit by adding more risks to their portfolio of DBA accounts.  The result, little engagement in the current marketplace when it comes to offering coverage as losses continue to shine a negative light on the DBA insurance program.


  1. Get your pricing while preparing for the proposal, not after.  Get your Defense Base Act Insurance policy pricing before, not after, a proposal is sent in for consideration by the KO.  This will avoid contract award margin surprises. Check out the Risk Recon Quick Quote page at https://theriskrecon.com/dba-insurance-quick-quote/
  2. Work with a competent insurance professional well versed in DBA insurance and government contracting.   Sometimes it is not the work you are doing, but what you are not doing that is most important.  If your insurance agent/broker is simply sending along the Statement of Work (SOW) with the application, the underwriter may assume those listed will be performed by your company, potentially increasing your rates.
  3. Complete a NEW DBA insurance application.  Changes of ANY operations should be noted as well as countries, deployment periods, and payrolls.  That being said…
  4. Verify payroll.  Include the only payroll associated with the work while in the country under the terms of the contract.  Short term deployments should reflect the percentage of payroll related to the work defined in the contract while under the insurance coverage only.
  5. Realize that DBA insurance is not 24-hour coverage for everything a contractor may encounter. Consider worldwide medical, accidental death and dismemberment coverage, and the evacuation of personnel on a moment’s notice.  Periods of Rest and Relaxation (R&R) for personnel traveling outside of the contract scope or Kidnap and Ransom situations, Defense Base Act Insurance will not respond.
  6. Review any and all emergency response programs supported by the DBA Insurance carrier, if any, that could be used on a moment notice if needed. Perform a drill where the system is tested against a scenario likely to happen based on the location of the work or the operations in question. Practice makes perfect.
  7. Ask about sub-contractors and whether or not they can be added to your DBA insurance policy. Avoid contractual non-compliance due to coverage issues by discussing sub-contractors in your program.  Unless agreed to in advance, some insurance companies may balk at covering sub-contractors.  Always ask in advance in order to avoid costly situations.
  8. For companies associated with low-risk tasks or environments, ask your insurance professional about alternative market options that may consider your work. Insurance companies with a low-risk threshold may provide a quote that is competitive or lower than currently in place (renewal) or options for new work.
  9. Consider the rate, not the premium.  The premium is a result of several factors, of which one is the rate.  This is where I suggest you focus your attention.  The rate is critical in any current or future contracts with similar work and/or location.  When determining the price for future contracts, consider the rate when developing your model.
  10. A minimum premium may appear high when comparing to others, but ask why before you do anything else.  Time and again, clients have mentioned the minimum premium costs associated with DBA insurance.  Rightfully so.  Nonetheless, even a low payroll contract in Poland will have a minimum premium of at least $5,000 USD associated with the policy. Middle East countries have a higher minimum premium of $7,500.  Being prepared for this cost is critical to maintaining a profitable contract.  Using any available remaining premium is suggested by securing additional contracts, offsetting the high cost of the initial insurance policy.

Finally, let’s end with some math… Top 10 buying tips for Defense Base Act Insurance by the numbers

When reviewing your need for contract proposal costs associated with DBA insurance, use this simple formula:

Payroll ÷ 100 × Rate = Cost for DBA insurance

For Example:

Your payroll for a construction contract in Brazil is $1,000,000 USD with a rate of $9.50 from the insurance company providing DBA insurance. (Sample numbers for illustration only)

$1,000,000 ÷ 100 = $10,000 × $9.50 = $95,000 in premium.

For additional questions or comments, contact Brian S. Smith direct at (770) 250-0227 or via email at brian.smith@ioausa.com


Veteran Affairs with the VEO and Team Rubicon

Veteran Affairs with the VEO and Team Rubicon

VEO and Team Rubicon Making A Difference In The Veteran Community

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.


To the VEO and Team Rubicon, taking care and being grateful to those men and women in uniform should not stop when the discharge papers are issued.  It must carry on with the support of our nation behind each and every veteran.  Unfortunately, Post-traumatic stress disorder (PTSD), depression, drug use, alcoholism, and other conditions/addictions lead to despair and hopelessness.  With a variety of events not intended to be discussed in this post, many veterans, now find themselves in unchartered waters.  Unable to maintain any semblance of their former selves, many veterans find themselves homeless.  In other cases, those same brave men and women are lost when their military missions are over.   With their missions complete, their personal direction becomes misguided, leading to complications many civilians cannot understand.  For this reason, we focus our attention on two organizations that combat these circumstances every day.  The VEO and Team Rubicon not only support the betterment of our veteran community, but they do so with dignity and respect.

With their personal new-found mission identified, members of Team Rubicon find themselves helping others after natural disasters.  Redirected, they use their military training and engagement to support local communities, organizing recovery and rebuilding efforts across the United States and beyond.  Unpaid and strictly voluntary, Team Rubicon leverages the skill sets of today’s modern warrior into an all-out effort to rebuild communities following major disasters.  In return, these warriors ask for nothing but the chance to once again serve this great nation, affording them an opportunity to “Charlie Mike”.

Other Warriors Are Still Without A Mission

Veteran homelessness is a sad, but true reality facing many in the United States.  Each year thousands of veterans find themselves without shelter, support, or a single meal to eat.  Lacking financial means and in some cases, personal identification, working with the Veteran Affairs Administration can be confusing and impossible for some to navigate.  It can take up to 6 weeks for paperwork to process, resulting in lost opportunities to help veterans get on their feet.  Here a transition plan with shelter and support is needed.  It is through the efforts of community organizations that the fight against veteran homelessness is met head-on daily.  The Veterans Empowerment Organization is one such organization.

Brothers And Sisters In Arms Lending A Hand – VEO and Team Rubicon

Over the past three years, I have engaged the Veteran Empowerment Organization or VEO for short, sitting as a member of the board of directors in the fight against veteran homelessness. I now see first-hand the impact it has on our community.  In this podcast, the VEO and Team Rubicon take on the issues of homelessness as well as self-respect and sustainability, both aspects near and dear to anyone that has ever worn a uniform.  Learn more about Brian Smith and his work at TheRiskRecon.com

Let’s Be A Hero/Heroine To Our Warriors

Each February, the Veterans Empowerment Organization hosts the annual gala as its primary fund-raising event.  Please visit https://www.veohero.org/ for more information on this amazing event and the mission it supports.  Please, take the time to listen to the show and consider getting involved personally or through your corporate organization.  It is critical that we now take on the role of protector, just as they did, each and every day they served without regard of themselves, but for the sake of you and me.

Is DBA Insurance reimbursable?

Is DBA Insurance reimbursable?

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.

It is great news to be awarded a government contract.  All the hard work that went into the proposal preparation and the on-time delivery has resulted in a “Big Win” for your company.  But what about the insurance costs?  Sure, you have insurance on your company, but does it anticipate the new exposure?  The new contract?  Wait, Is DBA Insurance reimbursable?

Premium determination for the new contract can have varied results.  If the insurance premium is low, no problem.  If the premium is higher than expected, the impact on the contract profitability can be devastating.

Can the insurance premium be reimbursed by the US Government?

Each awarded government contract stands on its own for reimbursable costs. Two contract types include firm-fixed-price contracts and fixed-price contracts.  The contracting officer and the proposal team must understand the insurance cost impact to the contract.  Costs outside of the scope of the operations will straddle the company with additional costs, reducing profitability.

Cost reimbursement must be approved by the contracting officer, and submitted for repayment if permitted.  On a fixed-price contract, there may be no relief.  It is important to know in advance, the overall cost of insurance.

To determine the premium, the rate, calculated per $100 in payroll, will provide an estimate of the cost. Your insurance broker/professional should assist with the rate determination. By contacting their office and asking for a rate associated with a certain occupation, you can determine the cost of insurance in advance so that profitability will not be marginalized.

If the insurance purchase was not considered during the proposal stage, it will impact the overall profitability of the contract award.  I recommend you speak with your insurance professional on the cost of the insurance and if the cost is worth the award.  They may come back with a very high rate, one that will simply put the entire contract profit in jeopardy.  Other considerations outside of DBA Insurance is the cost of business travel accident insurance.  Finally, ask Is DBA Insurance reimbursable?

Business travel accident is not required by contract but is suggested to fill in the gaps presented by DBA insurance.  For instance, if an employee suffers an illness such as influenza or pneumonia, this may not be covered under the DBA policy since it was likely not caused by a workplace matter.  That being said, the business travel accident insurance would provide for medical care as well as transportation should the employee need to be evacuated to another location.  in short, check with your insurance professional to make sure the gaps are covered.  Learn more about ancillary coverages such as business travel accident by visiting TheRiskRecon.com website.

In conclusion, the cost may be reimbursable, but it is important to know the costs before a contract is awarded.  Minimizing profit loss is critical in sustaining any operation, especially for government & defense contractors.

Do we need DBA Insurance for U.S. Government Contracts?

Do we need DBA Insurance for U.S. Government Contracts?

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.

A common question I get…Do we need DBA Insurance?  Will I need defense base act insurance for all my government contracts?  The answer depends on the location of the operation in which the contract takes place. For instance, if the contract work location(s) is within the United States, Defense Base Act insurance is NOT applicable. Standard state workers compensation programs will apply.

Defense Base Act insurance is required for ALL US government contracts that operate outside the United States

Defense Base Act insurance is required for ALL US government contracts that operate outside the United States, including Guam and Puerto Rico as territories. Defense Base Act Insurance may be waived for certain countries based on the US Department of Labor website at DOL.gov.  With a waiver, a company may be granted permission to provide an alternative to DBA insurance, such as self-insurance.  The waiver is determined by the US Department of Labor after an application is filed and a determination is made.

The premise for Defense Base Act insurance involving foreign operation locations outside the United States is quite simple.  In general terms, it is a workers’ compensation program that is specifically designed for workers operating outside the United States since workers compensation is a state-based insurance program and will not extend benefits outside of the US.

30 commonly asked questions about DBA Insurance

The insurance benefits under DBA are greater than domestic workers’ compensation, provided by means of a legislative act signed in 1942 that ensures US contractor’s recovery for injury and lost wages because of injury or illness.  Since state workers compensation laws and programs are not applicable outside of the United States, this program is critical to the success and safety of your employee base.

Defense Base Act insurance applies to US nationals, third-country nationals, and any local nationals that are working on the contract(s). The cost of DBA insurance is based upon the operations, country in which the work is performed, and the associated payroll. Additionally, any claims that have occurred under previous DBA insurance policies will impact the premium.  There will be no difference in the rate for a US national, a third country national or local national.

I don’t want to get DBA insurance.  It’s too expensive.  What is the worse thing that could happen?

Consequences of not obtaining DBA Insurance if required may include criminal charges and a fine.  Furthermore, the contracting officer may view this negligence as a mark against the performance of the contract.  Make sure you verify the requirements of the contract as related to insurance.

Visit the U.S. Department of Labor webpage for more details on the Defense Base Act or ask your insurance professional to explain.


Defense Base Act insurance-preventing costly mistakes

Defense Base Act insurance-preventing costly mistakes

Thorough contract review prevents costly mistakes from DBA insurance

Anticipated cost analysis saves thousands of dollars

Prevent costly mistakes from DBA insurance

Contractors currently working or considering working overseas must contemplate insurance needs that differ from the more familiar, domestic insurance programs, i.e., Defense Base Act insurance.  Each week, we receive 5 to 10 calls or email requests on DBA information.  Some questions involve cost, the time needed to get a quote, coverage, is it really necessary?…just to name a few.  In this article, I will discuss how to prevent costly mistakes others have made when it comes to DBA insurance. 

DBA Insurance vs. Workers’ Comp – 7 Points To Consider

In it’s simplest terms, Defense Base Act (DBA) insurance is workers’ compensation insurance on steroids.  In most states, workers’ compensation is a required benefit, afforded to employees to cover medical expenses and lost wages due to an injury, illness, disability, or death resulting from work-related practices.  In other words, your workers are protected by law, in the United States, if they are injured while working with workers’ comp.  Same holds true for workers engaged in US Government contract work overseas.  DBA is there to protect those workers while participating in work on foreign soil the same way workers’ compensation would protect them if they were employed in the US.  There are differences, however and here are 7… 

  1. Benefits
  2. Reputation risk
  3. Trust in business practices
  4. Detailing the work to be performed
  5. Subcontractors
  6. The risk of policy procrastination
  7. Complacency

Benefits are more robust than domestic workers’ compensation when compared side by side.  The claims are handled by insurance companies just as with workers’ compensation, but DBA claims have to be processed and approved by the US Department of Labor DBA insurance includes acts of war and covers employees while working in more hazardous areas (zone of special danger) of the world where the risks are greater due to political tensions, civil unrest, and military action.  Because the risks are different and in some cases greater, covering workers from such hazards is critical to the success of any government contract.

Reputation Risk

Reputations are oftentimes marred by a lack of insurance and/or employee well-being for government contractors not obtaining DBA and or other insurance coverage.  With recruiting efforts difficult at best for many companies, Human Resource professionals may be challenged with the “grapevine” of information that passes within the pool of potential workers needed to work on a contract.


Being short-sighted on insurance can be a regulatory matter as well.  If a company decides not to procure the necessary coverage for the satisfaction of the contract, penalties and fines may enter the picture.  From an insurance professional point of view, I have declined to work with companies that will refuse the coverage although mandated by the Defense Base Act.  The aspect of risk protected by insurance first, and foremost, based on trust.  If the client cannot be trusted to perform the baseline requirement related to government/defense contracting, what other areas may they fall short on?

Detailing the work to be performed

Contracts are supported by a Statement of Work (SOW) that details the operation(s) and the workers necessary to perform the contract requirements.  Occupations range from security, engineering, janitorial, to construction, and everything in between.  Because the operations are listed, it is CRITICAL that when discussing the operations from an insurance standpoint, the descriptions are clear and easy to understand.  Do not simply allow the SOW to speak for itself.  Misinterpretation of work is a very common mistake made by companies when securing DBA insurance.  If the work is not clear, then worse case scenarios will plague the underwriting process and potentially add additional premiums to the program.

Each occupation that is listed in the contract, will be assigned a rate for the cost of insurance.  For instance, if a contract indicates IT professionals working in an office environment, the rate will reflect this level of hazard.  If that same worker performs the work with a detachment of military advisers traveling throughout the region, this will be taken into consideration as well, likely increasing the rate and the overall cost of insurance.  Clarity is critical when outlining with work to be performed.  if subcontractors are used as part of the contract performance, be careful to obtain proof of their DBA insurance as well.  Many DBA policies issued by insurance companies will NOT extend to subcontracted labor.


Subcontractors may be a critical component of your contact performance.  Be aware of DBA policies that exclude subcontractors.  If a contractor requires the use of subcontractors, the subcontractor may be required to have their own DBA policy.  If they do not, another subcontractor may be required, or your company may have to hire direct, those workers performing the task.  Consider subcontractors to prevent costly mistakes from DBA insurance.


Another potential risk involves obtaining insurance AFTER the contract has already started.  As a business owner, the DBA insurance is required at the start of the contract.  The contracting officer (KO) may request proof of the coverage with a certificate of insurance.  The certificate must align with the start of the contract, not considered effective after.  In other words, if you have not procured DBA insurance and it is required, the date the coverage started must be within the time the contract started.  If not, the KO may consider your contract non-compliant.  Insurance companies have strict policies on changing the date of a policy or placing a date in the past when obtaining coverage.  This practice, in insurance-speak, is called back-dating and is prohibited by most insurance companies.  If you have a contract without the necessary insurance in place, the contract could potentially be canceled and payment for services performed may not be made.  Furthermore, past performance records may be impacted preventing future contracts from being won.


Complacency is your worst enemy in DBA insurance compliance.  First of all, secure the necessary insurance so your contract is good-to-go.  Second, don’t sit on your hands for years to come after the insurance is in place.  Consider other insurance markets, expertise, and premium savings by selecting the right insurance partner.  If you had to teach your current insurance professional about DBA insurance or if they only write a few DBA policies, be aware of potential shortcomings.  First and foremost is the general lack of experience many insurance professionals have when it comes to DBA insurance.  If your insurance professional routinely represents apartment complexes, dry cleaners, and restaurants, what could they really know about foreign liability exposures and underwriter guidelines for DBA insurance?  Putting it another way, would you trust a family doctor to perform brain surgery?  Not to compare DBA insurance with brain surgery in a literal context, this type of program is not in every agent’s wheelhouse.  Consider working with an expert to obtain the right rates, the understanding needed for claims, and providing the rates needed when seeking additional contracts.

Why is DBA insurance so expensive?  Or, is it?

Why is DBA insurance so expensive? Or, is it?


Workers moving munitions

Defense Base Act insurance, (DBA) is required insurance for all government contractors with work in foreign countries.  For the sake of this blog post, I will not venture into the specifics of where it is required, but will address the frequently asked question – Why is DBA insurance so expensive?

In response to this question, I oftentimes ask in retort – What does so expensive mean to you?  I respond not be evasive or coy, but to identify what their definition is of affordable as compared to what they wanted or expected to see.  The answers reveal bigger issues than that of price; procrastination and planning.  Procrastination in securing the coverage and planning or lack thereof, due to proposal costs versus the unexpected costs related to the insurance.

Let’s take a step back and look at the question, why is Defense Base Act insurance so expensive?  DBA insurance premium is based on three simple factors, the work performed, payroll associated with the work to be performed, and historical losses (if applicable).  The rate itself is the real basis of the premium question, so let’s stay there.

The rate determined by the underwriter is straight-forward once they understand the work to be performed.  If it is office work, then this rate.  If it is construction, then that rate and so on…The difference rests on how the work is understood by the underwriter and starts with the translation of the insurance professional to the underwriter when the application is completed.  When completing an application for DBA insurance, keep the following considerations in mind:

  • Do not simply send the Statement of Work (SOW) as a means of detailing the work to be performed by your company.
  • Ensure your insurance professional knows what is being performed, but equally, what is not being performed.
  • Ask your insurance professional to recite back to you the work you have indicated, so you can verify they understand in terms of risk and performance.
  • Articulate the many facets of the contract involvement that only your company is responsible for.  No more, no less.
  • Be cognizant of regional conflicts where the work is to be performed, i.e., the Middle East, Central or South America, Asia, Europe, etc. when considering the anticipated cost of insurance.  Countries or regions may have a significant impact on the rates afforded by the insurance companies.
  • Seek alternatives from a variety of insurance carriers by demanding your insurance professional provide responses for three or more insurers.
  • If weapons, watercraft, weapon systems, linguists, or field operations (outside the wire) are not involved, make sure this is added to the application.  Many underwriters will simply assume certain work functions and place a higher rate on a risk, just to be safe.  This is true too of your insurance professional.  Many insurance professionals have no experience or familiarity with military or government contracting operations.  It is important to ask them what they consider your contract to consist of the associated risks before they market your application to insurance companies.
  • Take an active role in completing and reviewing the application to be sent to the underwriter.  Ask your insurance professional, why should they be considered as a good carrier partner and not another insurer.  Is it strictly based on price, or are services offered, or will they be a strong partner as other contracts are won?
  • If payroll for the contract includes work that is performed in the United States, don’t include this in the contract payroll.  The payroll made in the US should be allocated to the domestic workers’ compensation program, not the DBA program.
  • Negotiate, negotiate, negotiate…Make sure the insurance professional is negotiating with the underwriter.  Even a small rate reduction could make a strong impact on your contract profit margin.
  • Select the right insurance partner.  Picking the wrong insurance agency or brokerage to work with could cost you thousands in additional premium costs if they are not familiar with similar contract exposures.

Procrastination and planning

Planning contract insurance demands

The best way to ensure premiums are affordable is to plan for the insurance well in advance of securing the award win.  During the proposal phase, the insurance rates should be discussed, determined, and placed in the proposal identifying the right costs associated with your bid.  If you look to secure DBA insurance after the contract award, you risk cutting into the profit margins possibly due to underfunding the anticipated cost.  Working with your insurance professional will offset the risk of unexpected costs well in advance through dialogue and rate determination.

Plan for any contract win by knowing the rates in advance and anticipating the premium associated with the new contract.  Oftentimes, a new DBA policy is required if the work is completely different from the original policy is already in place.  Factors include different countries of operation, work to be performed, subcontractor utilization.

In conclusion, I recommend working with the right person the first time when it comes to DBA insurance.  Simply tossing this type of insurance to an agent or broker that is not familiar with its underwriting or rate determination factors may make you initially feel good that it is done, but later regret you selected the wrong person for the job.  Again, right person, the first time.