28.301 Policy
Source: FAR 28.301 on acquisition.gov
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.
Contractors shall carry insurance under the following circumstances:
(a)
(1) The Government requires any contractor subject to Cost Accounting Standard (CAS) 416 (48 CFR 9004.416) to obtain insurance, by purchase or self-coverage, for the perils to which the contractor is exposed, except when-
(i) The Government, by providing in the contract in accordance with law, agrees to indemnify the contractor under specified circumstances; or
(ii) The contract specifically relieves the contractor of liability for loss of or damage to Government property.
(2) The Government reserves the right to disapprove the purchase of any insurance coverage not in the Government’s interest.
(3) Allowability of the insurance program’s cost shall be determined in accordance with the criteria in 31.205-19.
(b) Contractors, whether or not their contracts are subject to CAS 416, are required by law and this regulation to provide insurance for certain types of perils (e.g., workers’ compensation). Insurance is mandatory also when commingling of property, type of operation, circumstances of ownership, or condition of the contract make it necessary for the protection of the Government. The minimum amounts of insurance required by this regulation (see 28.307-2) may be reduced when a contract is to be performed outside the United States and its outlying areas. When more than one agency is involved, the agency responsible for review and approval of a contractor’s insurance program shall coordinate with other interested agencies before acting on significant insurance matters.
(c) Contractors awarded nonpersonal services contracts for health care services are required to maintain medical liability insurance and indemnify the Government for liability producing acts or omissions by the contractor, its employees and agents (see 37.400).