DBA Insurance 101

Any American company that serves as a contractor for the United States Department of Defense on their overseas defense bases in a specific capacity must have adequate insurance to protect their employees, both Americans and local nationals.

This insurance is called Defense Base Act (DBA,) which was enacted right before the start of American involvement in World War II in 1941. Over the years, the act has been amended several times to include other employees, such as infrastructure builders who work on behalf of the federal government. Here is a look at what private businesses should know about DBA insurance.

What Is DBA Insurance?

At its core, DBA insurance is essentially an extension of workers' compensation insurance that is extended to protect contracted companies and their employees who work overseas.

What Does DBA Insurance Cover?

Similar to workers' compensation insurance, DBA insurance covers the employer and employee in the event that a work-related injury or illness occurs. This includes total disability, which is compensated just as with traditional workers' compensation insurance, at a rate of two-thirds of the employee's weekly earnings. It is capped at a maximum weekly amount of just over $1,000, however.

Permanent disability is another area of coverage. If an employee becomes permanently and totally disabled and will be unable to return to work, DBA insurance will protect him or her and provide payments for the remainder of their life, even allowing for COLA (cost of living adjustments.)

If the worst should happen and an employee covered under DBA insurance is killed while working, the insurance will cover death benefits to his or her surviving family members. The amount awarded depends on the family size, with a spouse and one child receiving half of the employee's average weekly earnings, and a spouse with more than one child to support receiving two-thirds of the weekly income.

Of course, DBA insurance also covers the cost of any medical services or treatments required as a result of an on-the-job injury or an illness found to be caused by the work environment. The employee is not limited to being seen by specific physicians or medical facilities; it is up to them who they choose to see for their medical needs.

Who Must Have DBA Insurance?

Contractors and subcontractors must be working in certain specific capacities overseas for the federal government. For example, services that are provided for service members overseas or contractors involved in activities like road building, must usually maintain DBA insurance.

Any private company who is considering bidding on a government contract should immediately consult with an insurance agent who handles these matters and get a DBA insurance quote lined up. This will help them determine their bid.