What is Defense Base Act (DBA) Insurance?

The Defense Base Act legally mandates that certain U.S. contractors insure their employees against on-the-job occurrences. Any business owners that contract with the U.S. government must be aware of the act because the penalties for noncompliance are quite significant; emphasizing the importance of specialty markets insurance. This act was originally designed to cover workers on military bases outside the United States, protecting public work contracts with the government for the building of non-military projects such as dams, schools, harbors, and roads abroad. Today, any U.S. government work outside the U.S., whether military in nature or not, will likely require Defense Base Act coverage.

The Defense Base Act’s initial purpose was to provide workers’ compensation benefits to employees who were working overseas for private contractors on U.S. military bases. The DBA has now expanded to include additional groups. Current law covers a wide range of civilian workers (whether they are U.S. citizens or foreign nationals).

Extension of the Longshore Act

The DBA is an extension of the Longshore and Harbor Workers Compensation Act (LHWCA), which is a federal law providing benefits to land-based maritime workers who become injured on the job. The LHWCA affords similar benefits as state workers’ comp laws, including medical care, short- and long-term disability, and rehabilitation; but may be more generous than some state workers’ comp laws.

The DBA provides compensation for total disability that is two-thirds of the employee’s weekly income (up to $1,030.78 per week), offering a higher maximum benefit, therefore these coverages may be more expensive.

Coverage

Defense Base Act insurance is a form of Workers’ Compensation, protecting employers and contractor employees working on public sector projects outside of the United States. Higher benefit levels may be offered to eligible workers who have an increased potential liability for work-related injury, sickness or disease. DBA insurance is for any employee who is:

• Working on a military base or reservation outside the U.S.
• Involved in U.S. government-funded public works business outside the U.S.
• Engaged in a public works or military contract with a foreign government, which has been deemed necessary to U.S. national security.
• Providing services funded by the U.S. government outside the realm of regular military issues or channels.
• A sub-contractor involved in a contract listed above.

Noncompliance

An employer may face serious penalties if an employee subject to the DBA is injured on the job and the employer has failed to buy the required insurance. First, the employer must pay the benefits the worker is eligible to receive under the LHWCA; otherwise the injured worker may file a tort claim against the company for damages.

All government contracts contain a provision requiring that bidding contractors obtain necessary insurance. Failure to do so will result in large fines and possible loss of contract. The additional and most severe penalty is that employers without DBA coverage are subject to suits  under common law, in which the employees only need to file a suit and do not have to prove negligence.

About Moody Insurance Worldwide

Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.