A Guide to DBA Insurance for Contractors and Employees

If your employees work with the US government outside the US, you need a dba insurance policy. While workers inside the US have traditional workers compensation coverage for work-related injuries, employees outside the country on contract were not covered. The military also offered some forms of protection for its personnel in case of injury but civilians and contractors who worked with them were left exposed. The lack of coverage for this class of workers necessitated the enactment of the defence base act in 1941.

What is DBA Insurance?

The defense base act prescribes insurance coverage for contract employees who work outside of the United States.
Administered by the department of labor, the defense base act insurance protects employees in case of an injury, illness or death in the course of working on an overseas contract with the US military or agency.
Over time, amendments and court judgments shaped the administration of the defense base act insurance to include more contractors affiliated with US national security.
It extends the provisions of its predecessor, the Longshore and Harbor Workers’ Compensation Act(LHWCA) to cover exposed workers outside the US in case of injury, illness or death. The DBA insurance is essentially a worker’s compensation system that applies to government contractors working abroad. Work-related injury such as job accidents, car accidents or harm from hostile forces entitles an employee to dba benefits.

Who needs DBA insurance? 

Most contracts from a US government or agency that involves working outside the United States require defense base act insurance. Service providers such as medical workers, language specialists, engineers, consultants, logistic support and others are expected to carry a dba policy. Defense base act insurance applies whether the employees are residents of the US or foreigners. The following categories of workers need DBA coverage: 1. Workers of private contractors on US military bases or reservations. 2. Employees working on land being used for military purposes outside of the US which include the United States overseas territories and possessions. 3. Workers with the US government agencies. This include those employed for civil works, national defense and security contractors. 4. Employees who provide welfare or similar services to the US armed forces Such as the United Service Organization (USO) 5. Workers on contracts deemed necessary to US National security. 6. Contract workers under the Foreign Assistance Act. This includes those working for US agencies in providing military equipment, construction materials and assets to allies of the US. 7. Employees who provide services funded by the US government outside of normal military channels. 8. Any employee of sub-contractors or letting contractors that meets any of the criteria listed above.

Benefits of DBA Insurance

It applies to any injury sustained during the contract work even outside of non-working hours. Physical injury, chronic illness or kidnapping are all typically covered under a properly structured dba insurance program. The defense base act insurance provides specific benefits to covered employees or their survivors such as:

1. Total Disability

This is usually equal to two-thirds of an employee’s average weekly earnings. There is maximum amount per week for disability benefits which is subject to change every October. There may also be a compensation for partial earning loss. This benefit is usually tax free and it is paid until the employee returns to work.

2. Permanent Total Disability

For a permanent disability, an employee may be entitled to benefits for life. The payment is modelled after the annual cost of living.

3. Medical Treatment

An employee who becomes ill or injured in the course of a contract is entitled to treatment by a physician they choose.

4. Death Benefits

In the unfortunate incidence of death, an employee’s surviving spouse and child will receive half of the deceased’s average weekly earnings. For employees with two or more survivors, the payment is two-thirds of weekly earnings up to a weekly maximum.

5. Aliens and Non-US residents Benefits

For ill or injured non-US residents, benefits payment is 50% of the current value of future compensation if they are ill or injured.

6. Evacuation and Funeral Benefits

The dba acts incorporates part of the LHWCA to cover funeral expenses. This can be up to $3000 funeral benefits.

Legal Responsibility of Employers

The dba act requires contractors/employers to provide insurance coverage for overseas employees. Before sending out your workers abroad for any project, you are required by law to secure dba coverage for them. Section 1(a) and (5) of the defense base act stipulates that all contractors whose work falls under the purview of the act must take out an insurance policy on behalf of its employees and maintain the contract for the entirety of work duration.  You are also required to pay the premiums on the policy as a contractor, subcontractor or government agency. And if your employee qualifies for compensation due to injury or illness, you are required to report the incidence to kickstart their compensation process.

Consequence of Not Carrying DBA Insurance

This insurance is mandatory by law. Every government contract requires bidding companies obtain the necessary insurance for their employees. Failure to buy a policy when necessary may result in fines or contract termination. Another penalty for not carrying a dba is that your employees can sue you in federal courts under a common law civil suits. But in this case, the employee doesn’t have to prove negligence. The lack of a dba policy is enough for the suit to stand. If you refuse to obtain the federally mandated coverage, you or your company executive may be directly liable for work-related injuries sustained by your employees.

Filing DBA claims

An employer is required to inform the insurance carrier if an injury or death occurs.If medical treatment is needed, you should authorize it right away using form LS-1. The Employer’s First Report of Injury form LS-202 should be filed within 10 days of the knowledge of an injury to the Office of Workers’ Compensation Programs(OWCP). Timely and accurate filing will ensure that the injured employee will get the compensation they deserve according to the prevailing DBA benefits.

Conclusion

Whether you are a military or civil contractor working outside the US, your employees require a defense base act insurance. Failure to secure a DBA coverage can leave you open to legal suits in federal court in case of any injury or death.
We represent all four of the major DBA insurance carriers. We can handle your needs even on short notice and organize a dba coverage for your employees for any contract in any part of the world. Call us today for a consultation or with any questions that you may have about DBA application.

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