Most contractors skim the FAR insurance requirements in a federal solicitation and move on, assuming their current policy covers it. That assumption is one of the most common reasons contract awards get delayed, and it’s a costly one.
Federal insurance requirements are binding contractual obligations. They carry specific dollar amounts, coverage types, and documentation standards. They are not suggestions, and they are not flexible. Some generalist brokers may overlook FAR-specific endorsement language entirely, missing the details that matter most to a contracting officer.
At Risk Reconnaissance LLC, we work with contractors who didn’t realize their policy was non-compliant until a contracting officer flagged it. Based on our experience, the gap is almost always the same: the contractor didn’t know what the clause actually required. This guide covers the key clauses, minimum limits, special coverage triggers, documentation standards, and cost allowability rules you need to understand before your next award.
FAR insurance requirements under Subpart 28.3
Many contractors have heard of “FAR 28” but don’t know what it contains. FAR Subpart 28.3 is the section of the Federal Acquisition Regulation that governs insurance requirements for federal contracts. It sets the baseline coverage types and minimum dollar amounts and gives the contracting officer authority to require more. Understanding what 48 CFR Part 28 insurance rules actually demand, before award, is what separates contractors who close quickly from those who stall at the finish line.
The two clauses that appear most often in federal contracts
FAR 52.228-5 applies to fixed-price contracts where work is performed on a government installation. It makes the minimums in FAR 28.307 the floor, not the ceiling. The contracting officer can require higher limits based on the contract’s risk profile.
FAR 52.228-7 applies to cost-reimbursement contracts. It references the same required coverages but carries different cost allowability implications under FAR Part 31, where required insurance premiums are generally treated as allowable costs. Both clauses reference the same coverage types, but they activate under different contract structures. Review your contract’s Sections H and I, along with any agency-specific supplements, to identify the operative clause before you do anything else.
How the contracting officer shapes your specific requirements
FAR Subpart 28.3 sets minimum thresholds, but the contracting officer has documented authority to require additional coverage types or higher limits based on the contract’s risk profile. That authority comes directly from the clause language and the agency’s regulations. What is printed in the solicitation is what governs, not just the FAR baseline. Read the solicitation’s insurance section before you price the contract, not after award.
FAR insurance requirements: minimum coverage limits (FAR 28.307)
FAR 28.307-2 sets specific dollar minimums for each required coverage type. These are the floors. A contracting officer can require more.
The required minimums are:
- Employer’s liability: at least $100,000 per accident
- Commercial general liability: at least $500,000 per occurrence for bodily injury
- Automobile liability: at least $200,000 per person and $500,000 per occurrence for bodily injury, plus $20,000 per occurrence for property damage
- Aircraft liability: at least $200,000 per person and $500,000 per occurrence for bodily injury (non-passenger), plus $200,000 per occurrence for property damage; passenger injury limits are calculated per seat or per passenger, whichever is greater
- Property damage for government property: set by the contracting officer on a contract-by-contract basis; no universal FAR minimum exists
Why a standard business policy often falls short
Most commercial general liability policies are written for non-federal clients. They may lack the correct additional-insured language, waiver of subrogation provisions, or cancellation notice requirements that a FAR clause demands. A policy that meets your state’s minimums for auto or general liability may still be non-compliant under FAR 28.307 if the limits don’t match or the required endorsements are missing. Contracting office guidance consistently identifies these endorsement gaps as a leading source of pre-award compliance failures, and they surface at the worst possible time: right before award.
When special coverage types apply to your contract
Not every contract triggers every coverage type. The type of work you perform and where you perform it determines which special coverages apply. Two of the most commonly overlooked are Defense Base Act insurance and aircraft liability.
Defense Base Act insurance for overseas contract performance
The Defense Base Act applies when contractor employees perform work outside the United States on public-work contracts, on or near U.S. military installations abroad, or under contracts tied to foreign assistance and national defense programs. Both prime contractors and subcontractors working under a covered contract must carry DBA insurance before performance begins. DBA is not an add-on to workers’ compensation. It replaces standard workers’ comp for covered overseas employees and is governed by the Department of Labor, not state workers’ comp boards.
Failing to secure DBA coverage before mobilizing overseas is a compliance violation, not just a paperwork problem. Coverage must be in place before work begins, not after your team is already on the ground.
Auto and aircraft liability triggers
Automobile liability is required when the contract involves the use of motor vehicles during performance. This applies more often than contractors expect, particularly in facilities management, logistics, and base support contracts. Aircraft liability applies whenever the contract requires use of aircraft. The per-seat calculation for passenger bodily injury, $200,000 multiplied by the number of seats or passengers, whichever is greater, may exceed the limits on typical commercial aviation policies, so don’t assume a standard aviation policy will satisfy the clause.
Documenting compliance without delaying your award
One of the most common pre-award bottlenecks happens right here. The contracting officer requests proof of insurance. The contractor submits a certificate. The certificate is incomplete or doesn’t match the contract requirements. The award stalls.
What a compliant certificate of insurance looks like
The certificate of insurance must show the named insured matching the legal entity on the contract, policy numbers, effective and expiration dates, coverage types, and limits that match the contract’s requirements exactly. The certificate alone is not enough. The actual endorsement pages for additional-insured status, waiver of subrogation, and cancellation notice must be attached. Those endorsements carry the legal weight the clause requires. A note on a certificate is not the same as an endorsement.
Submit the certificate, all required endorsements, and a transmittal to the contracting officer confirming proof of insurance before performance starts. Keep a record of that submission in your contract file.
Common documentation gaps that stall contract awards
The most frequent problems we see at Risk Reconnaissance LLC fall into four categories:
- The named insured on the certificate doesn’t match the contract awardee, this happens often after corporate restructuring or joint-venture arrangements.
- The certificate shows the right limits, but the additional-insured endorsement is missing or names the wrong government entity.
- There is no cancellation notice provision, or the notice period doesn’t match what the clause requires.
- Subcontractor insurance compliance isn’t documented, which creates flowdown liability for the prime contractor.
Insurance cost allowability on cost-reimbursement contracts
This point matters most when you are building an indirect rate structure or pricing a cost-plus contract, and it’s one contractors frequently overlook.
How FAR Part 31 treats required insurance premiums
Under FAR Part 31 cost principles, specifically FAR 31.205-19, insurance premiums for required or approved coverage are generally allowable costs on cost-reimbursement contracts. Medical liability insurance is treated differently: it must be allocated as a direct cost to individual projects based on the insurer’s risk pool, not lumped into an indirect cost pool. Work with your accountant and broker to classify each premium correctly before you submit an indirect cost rate proposal.
Fixed-price contracts and who absorbs the cost
On fixed-price contracts, FAR cost principles don’t govern reimbursement the same way. The contractor prices insurance into the bid and absorbs it as a cost of doing business. If the contracting officer requires higher limits than you anticipated at proposal stage, that affects profitability. Flag it during pre-award negotiations before you are locked into a price that doesn’t account for the real cost of compliant coverage.
Turning FAR insurance requirements into compliant coverage
Understanding the rules is one thing. Getting a policy that actually satisfies them is another. Some generalist brokers may never have read FAR 52.228-5 or encountered a Defense Base Act policy. They write the coverage they know and hope it’s close enough. Contractors end up with a policy that meets the broker’s standard template but fails the contracting officer’s review, because the broker never read the actual contract clause. That gap costs contractors time, award delays, and sometimes the contract itself.
How Risk Reconnaissance LLC bridges the gap
Risk Reconnaissance LLC is built specifically for government and defense contractors. Our military background means we already understand the urgency of proposal deadlines and the language of federal contracting. Instead of translating FAR clauses for a broker who has never seen one, you work with a team that starts from the clause and builds the policy outward to match it.
Coverage is structured to satisfy the contracting officer’s requirements, meet prime contractor flowdown demands, and scale as you win contracts across new NAICS codes. You don’t have to teach us what DBA insurance is, explain what Section I of a contract contains, or walk us through the difference between a fixed-price and a cost-reimbursement structure. We already know, because government contracting is all we do.
Take this seriously before your next award
FAR insurance requirements are binding, specific, and documented in the clauses your contract includes. The minimums are a floor, not a guarantee of compliance. Documentation errors are just as costly as coverage gaps. Getting the right limits but submitting the wrong endorsement is still a non-compliant package.
Overseas work, vehicle use, and aircraft operations each carry separate triggers that a standard commercial policy won’t automatically cover. Defense Base Act coverage must be in place before performance begins overseas. Automobile and aircraft liability requirements activate based on how the work is performed, not just where it happens.
If your contract has a Section I with an insurance clause and you’re not certain your current policy satisfies it, that’s the right time to talk to a broker who specializes in government contracting, not a generalist who will figure it out alongside you. Risk Reconnaissance LLC can review your contract requirements and build a compliant program before your award is at risk. Reach out before the contracting officer does.