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Demystifying Defense Base Act Insurance

The world is getting smaller, and today, many businesses can conduct activities outside of the country much more easily. However, when working with the government, you must know how to protect your employees.

One area involves Defense Base Act insurance, which is a program that fulfills compliance of the Defense Base Act of 1941. At the start of WWII, the U.S. Congress passed the legislation to provide medical and financial protection for workers engaged in activities of the U.S. government in support of humanitarian and war effort operations. In the simplest terms, it is workers compensation insurance for employees engaged in government contracts outside the continental United States.

DBA insurance is often overlooked for companies new to working with government contractors. Because the insurance is required only for employees associated working overseas, the coverage can appear daunting if you’re not familiar with its placement. There are numerous points to consider when seeking coverage for the first time as well as when renewing existing policies.

For help in getting to know this unique coverage, here are answers from the U.S. Department of Labor to five commonly asked questions.

  1. What types of employment activities involve the Defense Base Act? 
    • Work for private employers on U.S. military bases or on any lands used by the U.S. for military purposes outside of the country, including those in U.S. Territories and possessions.
    • Work on public work contracts with any U.S. government agency, including construction and service contracts in connection with national defense or with war activities outside the country.
    • Work on contracts approved and funded by the U.S. under the Foreign Assistance Act, which, among other things, provide for cash sale of military equipment, materials, and services to its allies if the contract is performed outside of the country.
    • Work for American employers providing welfare or similar services outside the U.S. for the benefit of the armed services, e.g. the United Service Organizations (USO).
    • Any injury or death occurring to any such employee during transportation to or from the place of employment, where the employer or the U.S. provides the transportation or covers the cost.

If any one of the above criteria is met, all employees engaged in such employment are covered under the DBA—regardless of nationality, including U.S. citizens and residents, host country nationals, and local hires as well as third-country nationals (individuals hired from another country to work in the host country).

  1. What is Defense Base Act insurance and who must obtain it? DBA Insurance is considered workers compensation insurance for civilian employees working outside the U.S. on U.S. military bases or under a contract with the U.S. government for public works or for national defense. It must be obtained by employers, subcontractors, and subordinate contractors.
  2. Does DBA only apply to U.S. Citizens? It applies to all paid workers associated with the contract, including third-country nationals and local nationals. Benefits under the DBA are payable regardless of nationality. Therefore, employers should secure insurance coverage for all of their employees working outside the U.S. under a U.S. government contract, including U.S. citizens and residents, host country nationals (local hires), and third-country nationals (hired from another country to perform work in the host country).
  3. What does DBA provide in the form of benefits? The Defense Base Act provides disability and medical benefits to covered employees injured in the course of or arising from employment as well as death benefits to eligible survivors of employees killed in the course of employment or who died of causes arising from employment.
  4. Is Defense Base Act insurance considered 24-hour coverage?Although DBA insurance is active during all periods of work, it does not cover outside activities, such as excursions, periods of rest and relaxation (R&R), additional travel during breaks, etc. It is intended to provide benefits for injuries and lost wages due to work-related conditions.

For more on DBA insurance, read the extended version of this topic.

Brian W. Smith, ARM, CIC, is a commercial producer with Insurance Office of America. He can be reached at (404) 918-4775 or brian.smith@ioausa.com.