Defense Base Act Insurance: The Complete Guide for International Contractors
If your company has secured a contract to perform work outside the United States on behalf of a US government agency, you're required by federal law to carry Defense Base Act (DBA) insurance. This isn't optional. It isn't something your domestic workers' compensation policy handles. And not having it can lead to contract termination, federal debarment, and personal financial liability.
This guide covers everything you need to know.
What Is the Defense Base Act?
The Defense Base Act (42 U.S.C. § 1651) was enacted in 1941 to protect civilian workers performing work on overseas US government contracts. It extends the protections of the Longshore and Harbor Workers' Compensation Act (LHWCA) to US government contract workers operating outside US borders.
The Act is administered by the US Department of Labor's Office of Workers' Compensation Programs (OWCP), which processes all DBA claims.
Who Is Required to Carry DBA Insurance?
**Any contractor or subcontractor working on a US government overseas contract must carry DBA insurance.** This includes:
The obligation passes through the entire subcontractor chain. If you're a sub-subcontractor on a USAID project in Kenya, you need DBA insurance.
What Does DBA Insurance Cover?
DBA insurance provides workers' compensation benefits to employees injured or killed while working on covered contracts:
**Medical Benefits:** All reasonable and necessary medical treatment with no cap on costs. This includes emergency treatment in-country and transport to medical facilities.
**Disability Benefits:** Temporary total disability (66⅔% of average weekly wage), temporary partial disability, and permanent disability benefits calculated under LHWCA schedules.
**Death Benefits:** Surviving spouses receive 50% of the worker's average weekly wage. Minor children receive additional benefits. Benefits continue until remarriage (spouse) or age of majority (children).
**Vocational Rehabilitation:** Career counseling, education, and retraining when the employee cannot return to their pre-injury occupation.
Who Is Covered Under DBA?
DBA covers:
The reach of DBA is broad. A Philippine national employed by a US contractor on a DoD contract in Iraq is covered by DBA.
What Happens If You Don't Have DBA Insurance?
The consequences are severe:
1. **Personal Liability:** The contractor becomes personally liable for all claim costs — medical, disability, death benefits — with no limit. A single severe injury can cost millions.
2. **Contract Termination:** US agencies can terminate your contract immediately for failure to maintain required insurance.
3. **Federal Debarment:** OWCP can refer non-compliant contractors to the Debarment Office, potentially barring your company from all future federal contracting.
4. **Criminal Liability:** In egregious cases, willful failure to secure DBA coverage can result in criminal prosecution.
How Is DBA Priced?
DBA insurance is priced similarly to workers' compensation, using payroll-based rates that vary by:
Unlike domestic workers' comp, DBA rates are NOT set by state rating bureaus. They're negotiated with specialized international carriers, which is why using an agency that specializes in DBA is important.
How to Get DBA Insurance
**Step 1:** Gather your project information — contracting agency, contract number, project country, workforce breakdown (US citizens, local nationals, TCNs), and estimated annual payroll by job class.
**Step 2:** Work with a specialist broker (like Contractors Choice Agency) who has access to DBA-specific carriers. Don't go to your domestic workers' comp carrier — they don't underwrite DBA.
**Step 3:** Receive and review your quote. Most standard DBA placements can be quoted in 24–48 hours.
**Step 4:** Bind coverage and obtain your Certificate of Insurance, which your contracting agency may require as a contract deliverable.
DBA Claims Process
When an employee is injured:
1. Seek immediate medical treatment (employer pays out of pocket and is reimbursed)
2. Report the injury to your DBA carrier within 10 days
3. File OWCP Form LS-202 (Employer's First Report) with the Department of Labor
4. The carrier manages the ongoing claim with OWCP on your behalf
Common DBA Mistakes to Avoid
**Not covering all tiers of subcontractors.** Your prime contract requires it, and you can be held liable for subcontractors who skip DBA.
**Assuming your domestic workers' comp applies overseas.** It doesn't. Period.
**Underreporting payroll.** DBA audits payroll at policy expiration. Underreporting creates retroactive additional premium.
**Waiting until you mobilize.** DBA must be in place before employees deploy. Get coverage during the contract award phase, not after.
Frequently Asked Questions
Does DBA cover injuries from war and terrorism?
Yes. DBA covers injuries from war, terrorism, and hostile action — this is one of the key advantages over traditional workers' comp, which typically excludes wartime injuries.
Can DBA and FVWC be combined on one policy?
Yes. For contractors with both US government and commercial international projects, specialty carriers can write combined DBA/FVWC policies that cover both categories of international employees.
Is there a waiting period before DBA coverage is effective?
Coverage is effective on the binding date. Injuries occurring after binding are covered. There's no elimination period for DBA medical benefits.
International Contractors Insurance is a division of Contractors Choice Agency, licensed in all 50 states. Our specialists place DBA insurance for contractors working on projects in 140+ countries. Contact us for a no-obligation quote.