28.301
Policy
Contractors must obtain and maintain required insurance to protect both themselves and the government, with specific rules for cost allowability and agency coordination.
Overview
FAR 28.301 establishes the policy for contractor insurance requirements in government contracts. It outlines when contractors must obtain insurance, the types of risks that must be covered, and the circumstances under which the government may relieve contractors of liability or indemnify them. The section also addresses the allowability of insurance costs, coordination among agencies, and special requirements for health care service contracts.
Key Rules
- CAS 416 Applicability
- Contractors subject to Cost Accounting Standard (CAS) 416 must obtain insurance for relevant risks unless the contract indemnifies the contractor or relieves them of liability for government property.
- Government Disapproval of Insurance
- The government can disapprove insurance coverage that is not in its interest.
- Allowability of Insurance Costs
- Insurance program costs must comply with FAR 31.205-19 to be allowable.
- Mandatory Insurance Types
- All contractors must provide legally required insurance (e.g., workers’ compensation) and additional coverage when necessary to protect government interests.
- Minimum Insurance Amounts
- Minimum insurance requirements may be reduced for contracts performed outside the U.S. and its outlying areas.
- Agency Coordination
- Agencies must coordinate on significant insurance matters when multiple agencies are involved.
- Medical Liability Insurance
- Health care service contractors must maintain medical liability insurance and indemnify the government for acts or omissions.
Responsibilities
- Contracting Officers: Ensure contractors have required insurance, review and approve insurance programs, coordinate with other agencies as needed.
- Contractors: Obtain and maintain required insurance, comply with cost allowability rules, indemnify the government when required.
- Agencies: Coordinate insurance program reviews and approvals for multi-agency contracts.
Practical Implications
- This section ensures the government and contractors are protected from financial loss due to various risks.
- Contractors must carefully assess insurance needs and comply with both legal and contractual requirements.
- Failure to maintain proper insurance can result in disallowance of costs or contract noncompliance.