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Defence Base Act Insurance

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What is Defense Base Act Insurance

Coverage under the Defense Base Act extends to civilians serving in a support capacity abroad. It’s a form of worker’s comp insurance that’s mandatory for all workers, no matter their citizenship. Examine the details of the Defense Base Act insurance and how it functions.

There is federal legislation called the Defense Base Act that could apply to federal contractors who have employees working on foreign military bases or under foreign public work contracts (DBA). Certain contractors are mandated to provide workers’ compensation insurance that satisfies the Defense Base Act standards to protect their employees from financial loss in the event of an on-the-job injury. Contractors have the option of purchasing this coverage from a list of pre-approved insurance providers or seeking permission to self-insure. The DBA is important for business owners to be aware of because of the severe consequences for noncompliance when doing business with the United States government.

How DBA Works

A few months before America’s entry into World War II, Congress passed the Defense Base Act (DBA) of 1941. Its original intent was to offer compensation for civilians employed by private contractors on U.S. military sites abroad. The DBA eventually grew to incorporate other associations. At present, the law covers four categories of civilian employees, whether they are citizens of the United States or not.

  • Private firms working on U.S. military bases or other overseas U.S. government property: Company A needs DBA insurance if it operates snack bars on U.S. military facilities around the world.
  • Contracts for government work in the United States include defense-related and war-related contracts for construction and services performed outside the United States. Therefore, workers employed by Company B in conjunction with a bridge-building project it has undertaken in Turkey under a contract with the U.S. Army are included.
  • If the work is done outside of the United States, the Foreign Assistance Act-authorized and -funded contracts for the cash sale of military equipment, materials, and services to its allies fall under the following categories. The same holds true if firm C, hired by a charity to build a school in Sudan, employs local citizens to undertake the work.
  • For American businesses that provide military families with welfare or equivalent services outside the United States: Care package deliveries made by United Service Organization (USO) workers to U.S. military stations abroad are one such example.

The DBA is an expansion of the federal statute known as the Longshore and Harbor Employees Compensation Act (LHWCA), which aids injured maritime workers based on land. Medical treatment, temporary and permanent disability, and rehabilitative services are all provided under the LHWCA, just as they are under state workers’ comp statutes. The federal program, on the other hand, might be more generous than state workers’ comp legislation.

In the case of total disability, the DBA provides for a payment equal to 66 2/3% of the employee’s average weekly earnings (up to $1,030.78). During the 2020-2021 fiscal year, the highest weekly benefit allowed by the Montana workers’ comp statute is $899. A greater maximum benefit is available through the DBA. This is why the cost of DBA insurance could be higher.

Costs of Infractions
If a worker covered by the DBA suffers an injury on the job and the employer hasn’t purchased the necessary insurance, the company could face stiff fines. The first step is for the employer to provide the DBA-mandated benefits to the employee. A worker who has been harmed on the job may sue their employer for compensation if they are not compensated. The following are not valid defenses that the company can use to counter the claim:

  • Contributory negligence: This occurs when a worker’s negligence contributes to their injury.
  • Assumption of risk: Employers can’t argue that the worker assumed the risk of injury when they took the job.
  • Fellow-servant rule: They also can’t defend themselves by saying the worker’s injury resulted from a fellow employee’s negligence.

It is a misdemeanor to violate the DBA by not providing the advantages that are mandated by it. If an employer is found guilty, they might face up to a $10,000 fine, a year in prison, or both. In the case of a corporation as an employer, the fine and possible jail will fall on the corporate officers. The corporation’s top executives may be held personally accountable for benefit payments in the event of a benefit payment default by the corporation.

Advantages similar to workers’ comp are paid for by DBA insurance. Medical costs, as well as disability and death benefits, are all part of this package. Injuries sustained by employees throughout the course of their employment are covered regardless of when they occur during the workday.

Total disability benefits pay out at a rate of 66 2/3% of an employee’s pre-disability average weekly wage, up to a cap of $1030.78. Payments are made for those who are partially disabled as well. If there is only one surviving employee, they will receive two-thirds of the employee’s average weekly wage, and if there are two or more survivors, they will receive one-half of the wage. We count as survivors those who have a spouse and/or children.

Workers from outside the United States are protected by the DBA, and they may be paid in a single, lump sum rather than biweekly installments.