Defense Base Act Insurance for Contractors Abroad (FAQ)
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Visit the United States Department of Labor FAQ on DBA Insurance as well or print in PDF.
DBA Insurance: Do I have to have this coverage ? If not, what are my alternatives ?
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.
What exactly are the benefits & limitations of DBA ?
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.
How do the carriers calculate rates for DBA insurance ?
Like domestic U.S. workers’ compensation insurance rates, DBA insurance rates are either computed per $100 of payroll 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).
What a minimum premium for DBA insurance ?
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.