As an employer of civilians working overseas for the U.S. government, it’s important to be aware of Defense Base Act (DBA) insurance requirements and benefits. DBA insurance provides coverage for employees in case they are injured or killed while working on a defense contract–but it also protects business owners and contractors from being legally and financially liable! While there are certain legal requirements that come with DBA insurance, there are also many valuable benefits that can help protect your employees and your business. In this article, we will discuss when DBA insurance is required, the top five Defense Base Act benefits, if DBA insurance is necessary, and how to maximize DBA coverage benefits.
Defense Base Act Benefits–Beyond the Legal Requirement
When Is Defense Base Act (DBA) Insurance Required?
If you are a contractor working with any federal U.S. government entity and sending American citizens and/or legal residents to work on a contract abroad, you will be required by law to procure DBA insurance for your crew. This protects not only your employees, but your business as well—as in the event that an injury, disaster, or death happens, the employer will be financially liable for any damages.
There are some relatively rare scenarios in which DBA insurance is not deemed necessary and the Secretary of the Department of Labor (DOL) will grant a contractor a waiver. An example of this includes working with local nationals in another country rather than with American citizens to carry out your contract. However, you must still provide the local equivalent of workers’ compensation for the employees under your charge. For more information on DBA waivers, check out our recent article on the topic!
What Are the Top 5 Benefits of DBA Insurance?
Depending on a great many factors, such as the type of work you will be doing, and where, and with how many employees, and the size of your payroll (and even more factors), the relative cost of DBA coverage can grow pricey quite quickly—especially for higher risk assignments. However, it is a legal requirement for most federal government contractors, and for good reason; it protects their business, their employees, and the overall success of the mission. Here are the top five Defense Base Act benefits you can expect once you apply for coverage with an experienced carrier:
1. Thorough Risk Assessment: A quality DBA insurance provider like the experienced crew at Risk Reconnaissance will have access to the latest intelligence regarding area stability, local physical safety hazards, and other risks associated with your work in a foreign country. They will be able to come up with a comprehensive list of likely risks (and even some less likely ones) to determine the cost of your contract’s coverage. This can not only provide you with a more comprehensive insurance policy, but it can also give contractors valuable insight into obstacles they are likely to expect when working abroad.
2. Work-Related Injury or Disability Benefits: Should an employee become injured or disabled while working abroad, they will be compensated for this. For example, total disability compensation is two-thirds of the average weekly earnings for the employee and can be extended to their maximum weekly compensation. If an employee is injured and experiences a partial loss of earnings, they will also be compensated for that. Injured employees will also have their medical expenses (and, if necessary, evacuation expenses) covered.
3. Work-Related Death Benefits: If an employee should die over the course of their contract, DBA insurance provides the family of the deceased with benefits. This also applies to employees who perish as a direct result of carrying out their contract—whether or not it was within the established window of the contract or after. Typically, death benefits consist of one-half of the average weekly earnings of the deceased employee; these are allocated to the surviving spouse or child. However, this can sometimes extend to two-thirds of the average weekly rate up to the maximum weekly earnings for the deceased, though these benefits are subject to cost of living adjustments appropriate for each year.
4. Ability of an Injured Party to Be Treated by Their Chosen Physician: If an employee becomes injured in any way on the job, it is within their rights to seek medical treatment from the qualified physician of their choice.
5. Peace of Mind: For employers, the cost of DBA insurance is often worth the peace of mind that comes with this investment, and in knowing they are no longer considered liable in the event of the unthinkable. Additionally, this benefits their crew as well, as they know they will be taken care of should they become injured or disabled, and that their families will be compensated in the event of their death.
Do I Have to Pay for DBA Insurance?
You do not have to pay for DBA insurance if you have received a waiver from the Secretary of the Department of Labor (DOL)—however, failing to secure adequate DBA coverage when it is legally required can have severe consequences, from steep penalties to potential jail time. If you are a contractor working with a federal agency and bringing U.S. residents as your employees overseas, it’s better to take the time and find the right policy for your mission rather than face the consequences of not paying for insurance from the start. U.S. government contracts are likely to be audited, and it is unlikely you will be able to skip this step without legal or financial consequences.
Best Defense Base Act Benefits with Risk Reconnaissance
When it comes to protecting your enterprise as well as your valuable crew, you can’t do much better than looking into thorough Defense Base Act coverage with a credible carrier like Risk Reconnaissance. With decades of insurance experience and 14 years of military history, our firm can help contractors honestly assess risk using the latest insights and to come up with a custom plan that provides them with the resources they need to bring their crew home safely after another successful mission.