DBA Insurance Meaning: A Beginner’s Guide

If you work in the United States but are contracted to work overseas, or if you’re a business owner with employees who might occasionally work overseas, DBA insurance is something you need to be aware of. DBA stands for “Defense Base Act,” and it’s a type of insurance that provides coverage in the event that an employee is injured while working on a government contract outside of the United States. In this article, we’ll explain DBA insurance meaning and its applications, who needs it, how much it costs, and the difference between DBA insurance and normal worker’s compensation.

DBA insurance, or Defense Base Act insurance, helps to protect US government contractors, their subcontractors, and their employees from work-related injury when on an assignment abroad. DBA insurance protects US government contractors from potential liability should an employee become injured or ill, including evacuation and medical costs, and any other basic life-promoting needs.

If you are a contractor working for the US government either through the Department of State, the US Army Corps of Engineers, or the Department of defense, you are required by law to procure DBA insurance to protect yourself and your employees while they are on an overseas assignment. Especially after 2001 and the associated war efforts in Iraq and targeting ISIS threats to American safety, the demand for DBA insurance has increased nearly ten times over. Anyone planning to send their employees or subcontractors to a high-risk environment must have DBA insurance—and even for those sending their crew to US-allied countries, DBA insurance is still required.

Well, while similar enough in original concept in the sense that this form of insurance is designed to protect workers should they become injured on the job (and the employers that would suddenly become liable), traditional worker’s compensation specifically regulates domestic workers on US soil. DBA insurance, on the other hand, is designed to specifically help employers tackle employees’ work-related injuries while they are abroad. Additionally, DBA insurance will often cover more of an employee’s day abroad than their hours strictly on the clock, as they may be in a “zone of special danger” and deserve the opportunity for “reasonable recreation.”

For contractors who employ their subcontractors and workers to work both within US territories and abroad, a separate payroll will need to be accounted for to represent each country in which they work. Much like domestic worker’s compensation policies, your DBA insurer will likely audit you at the end of your policy to ensure that payroll expenses match your reports.

One thing about working with the US government in any capacity is that changes, improvements, and setbacks are likely to happen in spite of our best planning efforts. Should you be one of the many whose payroll changes during your assignment, it’s important to look for DBA insurers that offer flexible policies that can work with changing payroll estimations as long as you do the due diligence of keeping track of domestic and overseas payroll.

There are many aspects of the contract work that go into determining how much a US government contractor’s DBA insurance will cost. One such factor is the job site and the associated level of risk with the assignment—for example, countries that are at a higher risk for “civil unrest” will likely cost more for an annual policy than those that are considered less volatile. However, there are further determining factors that go into indicating the annual price point of a contractor’s required DBA insurance. Some of these influencing factors include:

1.     The qualifications and competency level of your staff

2.     The number of employees sent abroad

3.     The known number of trips required to get the job done

4.     Transportation plans for mobility abroad

5.     Geographic area and political climate

6.     12-month payroll for all overseas employees

7.     If employees will be working on post or off base

8.     The nature of your employees’ assignments

9.     And any prior losses or claims filed with previous DBA insurers

However, most US government contractors can bet on spending between $5,000-$10,000—or even more for an annual policy, depending on the above factors and potential risks associated with the assignment. Additionally, for an employee who will likely be spending time in an office or behind a desk, the premiums will often be lower than other jobs requiring physical labor. As is to be expected, clerical work typically also costs less on payroll than higher-risk, physical jobs.

Hopefully over the course of this article, we’ve answered some of your questions about DBA insurance meaning. Especially if you’re new to US government contract work, the logistics of sending your employees overseas can seem daunting—from payroll audits to the nature of the job you’ve signed up for. While higher-risk opportunities often come with higher DBA insurance annual policies, they often come with higher rewards as well. When it comes to finding the right DBA insurance provider for your upcoming endeavors, why put your faith in anything less than the best coverage that protects your crew and your interests?

Here at Risk Reconnaissance, we understand projects evolve, payrolls change, and travel becomes increasingly necessary. We are a reliable source of aid should your employees ever need it, with the flexibility to help you carry out your assignment without undue stress or strain. Want to learn more about what we can do for you and your crew? Contact us today!