Established in 1941, the primary goal of the Defense Base Act was to cover workers on military bases outside the United States. DBA coverage was amended to include public works contracts with the government for the building of non-military projects such as dams, schools, harbors, and roads abroad. A further amendment added a vast array of enterprises revolving around the national security of the United States and its allies.
Today, almost any contract with an agency of the U.S. government, for work outside the U.S., whether military in nature or not, will likely require Defense Base Act coverage.
Defense Base Act coverage is designed for the following overseas employment activities:
1. Any employee* working on a military base or reservation outside the U.S. This includes those working for private employers on US military bases or on any lands used by the US for military purposes outside the Unites States, including US territories.
2. Any employee engaged in U.S. government funded public works business outside the U.S. This can include construction and service contracts in connection with national defense or with war activities outside the USA.
3. Any employee engaged in a public works or military contract with a foreign government which has been deemed necessary to U.S. National Security.
4. Those employees that provide services funded by the U.S. government outside the realm of regular military issue or channels.
5. Any employees of any sub-contractors of the prime or letting contractor involved in a contract like numbers 1-4 above.
* note that "any employee" also refers to TCNs (third country nationals), non-US citizens and the like; not just US citizens.
Not obtaining the federally mandated / required DBA workers compensation insurance carries considerable penalties and fines. All governmental contracts have a provision requiring those bidding for contracts with the US government to obtain the required DBA coverages . The most severe legal ramification of an employer without DBA workers compensation coverage are subjected to law suits under common law and where these defenses are waived... essentially allowing a claimant or their heir(s) to file suit and not having to prove any negligence. Serious stuff. Read the details in our FAQs page.
This scenario comes up all the time. If you are not required to provide DBA workers compensation coverage or it's being provided for you, it's certainly a wise move to provide supplemental personal accident life, medical and disability insurance coverage.
Keep in mind that Defense Base Act Insurance is not the "be all to end all" coverage -- it's only "on the job" workers compensation. There are many gaps in the coverage when it comes to providing contractors adequate life, disability and medical benefits. We highly recommend supplementing DBA coverage but IF you are not required to have DBA, we absolutely recommend highly that you take out a war zone personal accident plan.
We recommend reviewing our independent contractors personal accident insurance page regarding these coverages, benefits and costs. There you will be able to submit for a quick quotation for special risk accident life insurance and medical insurance for war and terrorism risk coverages that cover both on and off the job worldwide. Or not sure what you need, simply complete our form submission page for a contact right away.
If you're on this page and reviewing our information, you are most probably in the initial phase of bidding on a contract or have bid on a contract and looking to compare rates or secure coverage right away.
Minimally, you will need to have an understanding of the DBA Insurance costs so you can submit your bid fully intact to win your company's bid. The reality is that the time constraint levied on you to do so is generally "last minute", having needed it "yesterday".
The good news is DBA coverage generally does NOT have to be in force at the time of bid submittal, rather you should be aware of your premium cost outlay for the DBA Insurance. You are able to build this cost into your reimbursement under your contract. VERY IMPORTANT !
Depending on the payroll involved with your contract, this can be significant, generally from 5 to 10% of total foreign payroll, depending on the occupational hazards and ratings involved, along with hot spot country locations involved.
Any proposal provided by our carriers without fully supported data requested (ie; final payroll numbers, geographic locations, occupation risks not considered, lack of receipt of a Statement of Work (SOW), etc.) will only allow us to provide a NON-BINDING Indication, not a binding quotation.
Here's how to begin:
Having received all items above, we generally can turn out a preliminary rating in about 48 hours (some times longer). We can do this because we have unprecedented access to ALL the DBA carriers in the USA and abroad. If you have already submitted to carriers or have another agent doing so on your behalf, you must advise us of this when sending to us to quote.
DBA insurance coverage is generally not optional. The US federal law (under Dept of Labor) states it must be obtained for certain situations including those in which US or foreign-based employers contract with the United States Government to perform certain projects or services outside the United States, including public work contracts involving construction and services provided in connection with the national defense or war activities outside the United States. Failure to obtain the proper coverage carries federal penalties.
Employers that are not properly insured may find themselves in a precarious situation because an injured employee can also elect to either claim compensation under the Defense Base Act or file suit against the employer under general tort law for certain damages and injuries which occurred as a result of working for the corporation. If such as lawsuit is filed, the employer may not be able to rely on customary tort defenses that they would typically have when a lawsuit is filed against them mainly (A) the employees’ own contribution to the cause of the work-related injury or (B) negligence or dangerous activity that the employee engaged in which resulted or contributed to the employees’ injury.
Certain sections of the defense base act spell out who is responsible for purchasing the coverage and the ramifications for not securing this federally mandated coverage. Specifically, section 4(a) which addresses the employer’s potential liability if coverage is not secured and section 5(a) which speaks to the primary contractor relationship to any subcontractors and who is responsible for securing Defense Base Act insurance.
Section 38(a) covers specific charges if a contractor is found guilty of not securing Defense Base Act insurance and it also outlines the punishment, fines, and possible imprisonment for not complying with the act.
DBA insurance provides for both short and long term disability benefits, medical benefits for those injured or killed in the course of their employment ... note; generally speaking this means "on the job". There is also a life insurance or death benefit payable to eligible survivors. According to the US Dept of Labor, permanent total disability and death benefits may be payable for life, and are subject to annual cost of living adjustments.
Like domestic U.S. workers’ compensation insurance rates, DBA workers compensation insurance rates are either computed per $100 of payroll and/or with a minimum premium established, meaning the premium base for DBA insurance is computed per $100 of covered employee remuneration / payroll, subject to a minimum premium level.
Additionally, policies are calculated using remuneration as the basis. "Remuneration," sometimes referred to as "pay-roll," means the entire payment for services rendered by the covered employee, whether paid in money or some substitute for money. For purposes of computing premiums, remuneration includes regular pay (i.e., salary or hourly), commissions, and bonuses.
As with domestic workers’ compensation insurance, DBA insurance rates vary depending on many factors, including for example the hazardousness of the work being performed, the insured’s loss or accident experience, the payroll exposure, the insured’s financial standing, the insured’s and the covered employees’ experience, security and safety practices, and covered employee concentration levels (i.e., employees working, traveling, lodging, or eating together).
The minimum premiums for DBA insurance are generally determined by the carrier to cover significant upfront and administrative costs, including without limitation contract administration, underwriting, claims handling, reinsurance, accounting, etc. These generally range from $5000 to $10,000 / year in premium depending on the case. That is the lowest price for an annual plan. The total premiums can be much higher based on total payroll numbers, location hot spots, occupation, loss history and more.
Absolutely ! Learn more at our Personal Accident War Risk Pages .
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