For US government contractors and subcontractors working overseas, project success relies on more than strong execution. It also depends on understanding a crucial requirement, i.e, the Defense Base Act (DBA). This specialized workers’ compensation insurance is mandatory for many employees working abroad.
Its rules can be complex and easy to overlook, which creates compliance challenges for employers. However, navigating DBA coverage is vital for meeting legal obligations and ensuring financial protection. It also demonstrates a strong commitment to responsible, ethical, and proactive workforce management.
In this article, we’ll clearly explain the DBA, its coverage, and key employer obligations for compliance and protection.
Defense Base Act Coverage: An Overview
At its core, the DBA is a federally mandated extension of the Longshore and Harbor Workers’ Compensation Act. Enacted in 1941, it establishes a consistent system of workers’ compensation benefits. It protects civilian employees working abroad on US government contracts.
So, what is Defense Base Act coverage in practical terms? It is a legally required insurance policy employers must secure and maintain. It provides no-fault medical, disability, and death benefits for employees injured or killed during employment, regardless of location. Benefits apply even without employer negligence, except in cases of willful misconduct or intoxication situations.
Moody Insurance Worldwide notes that the challenges of complying with US and foreign insurance laws can be complex. Government contractors encounter unique risks in both domestic and overseas environments. It is better to work with organizations that have decent experience in this specialized field.
When Employers Are Required to Carry DBA Coverage
Employers must carry DBA coverage when they hire civilian employees to work on US government contracts outside the country. This includes work performed in US territories and on military bases. The requirement applies to both contractors and subcontractors. It covers roles in public works, military support, reconstruction, and foreign aid projects.
According to the US government, agency heads may request a waiver of the Defense Base Act for specific contracts or employee groups. This request must be submitted to the Department of Labor’s OWCP. No waiver is permissible for employees who are US citizens, legal US residents, or those who were hired domestically. A waiver is valid only if alternative local workers’ compensation benefits are provided.
Key Benefits and Compensation Provided Under DBA
Defense Base Act coverage provides essential protection to employees injured or incapacitated while working on US government contracts abroad. It includes full medical care, disability compensation, and vocational rehabilitation. Survivor benefits support dependents in fatal cases. These safeguards help ensure financial stability for affected workers and their families.
US regulations specify that employees with total disabilities are compensated at roughly 66% of their usual weekly pay, capped at a maximum allowable amount. Death benefits pay one-half to one child or spouse, or two-thirds for multiple survivors. Funeral expenses up to $3,000 are covered. Annual cost-of-living adjustments also apply.
Common Risks and Injuries Covered Overseas
A key principle for employers to understand is that DBA coverage is no-fault. Workers are eligible for compensation even if they cannot demonstrate any negligence by their employer. They only need to establish that the injury occurred in the course of their employment. This broad coverage is a fundamental protection for employees and a key liability management tool for companies.
The “Zone of Special Danger” doctrine is particularly important for overseas work. This principle recognizes that employees in remote or high-threat locations face continuous, round-the-clock risks, not only during assigned work hours. As a result, injuries occurring during off-duty activities, such as within a base camp, may still be compensable.
How Employers Can Secure DBA Insurance
Securing a DBA insurance requires employers to work with carriers approved by the US Department of Labor. The process starts by reviewing contract obligations and assessing workforce risks. Employers must gather details on roles, locations, and project duration. Specialty brokers usually assist with obtaining coverage and ensuring compliance.
Travel Insurance Center reports that DBA insurance rates are calculated per $100 of payroll. In some cases, a minimum premium is also required. This means the premium base is tied directly to each $100 of covered employee remuneration. It remains subject to an established minimum premium level.
Employer Responsibilities After an Injury
When an employee is injured overseas, employers must act quickly to meet DBA requirements. They must provide immediate medical care and document the incident. A First Report of Injury must be filed with the Department of Labor on time. Employers must also cooperate with insurers and support the worker’s recovery.
The US government states that from a relatively small segment of the casualty insurance market, DBA premiums totaled just $18 million in 2002. Over time, the program expanded dramatically. It now covers nearly 200,000 prime and subcontractor employees. Government-wide premiums exceed $400 million annually. It reflects the growing scale of DBA responsibilities.
Frequently Asked Questions
Do contractors working for subcontractors also need DBA coverage?
Yes. Contractors working for subcontractors also need defense base act (DBA) coverage when performing work on US government contracts overseas. This requirement applies to every tier of contracting. Each subcontractor must secure its own DBA policy to remain fully compliant and protect all employees.
Does DBA coverage apply in non-war zones or low-risk countries?
Yes, DBA coverage applies in non-war zones and low-risk countries when employees work on qualifying US government contracts abroad. The requirement depends on contract type, not local danger levels. Even in stable regions, employers must maintain DBA insurance for compliance and protection.
What happens if an employer cannot find a carrier willing to insure high-risk roles?
If an employer cannot secure coverage for high-risk roles, they may obtain it through a Department of Labor–assigned provider. This is typically arranged under FECA special programs. It ensures all eligible employees receive mandatory DBA protection when commercial carriers decline.
Ensuring Compliance and Protecting Your Workforce Abroad
Understanding Defense Base Act coverage is essential for employers working under US government contracts overseas. It ensures they meet critical legal and safety obligations. Knowing when coverage is required and what benefits it provides helps minimize risk.
Proper compliance also reduces potential legal exposure. By securing the right insurance and following reporting rules, employers build a safer and more resilient global operation.