Liability and Insurance-Leased Motor Vehicles
Contractors leasing motor vehicles to the government must maintain specified insurance coverage, indemnify the government for their own negligence, and provide proof of insurance before work begins.
Overview
FAR 52.228-8 establishes the liability and insurance requirements for contractors leasing motor vehicles to the federal government. The clause delineates the responsibilities of both the government and the contractor regarding loss, damage, injury, or death involving leased vehicles and third parties. It also sets minimum insurance coverage amounts and outlines notification and policy requirements to ensure the government’s interests are protected.
Key Rules
- Government Liability
- The government is responsible for loss or damage to leased vehicles, except for normal wear and tear or contractor negligence, and for third-party property damage or injury/death if covered by the Federal Tort Claims Act.
- Contractor Liability
- Contractors are liable for and must indemnify the government against claims arising from their own (or their agents’/employees’) negligence or wrongful acts.
- Insurance Requirements
- Contractors must maintain insurance with minimum coverage: $200,000 per person, $500,000 per occurrence for bodily injury/death, and $20,000 per occurrence for property damage.
- Notification and Policy Endorsements
- Contractors must notify the Contracting Officer in writing before work begins that insurance is in place, and policies must include specific endorsements regarding cancellation and subrogation.
- Exclusion of Government Liability Costs
- Contractors must not include costs for insurance or contingencies covering losses for which the government is responsible in the contract price.
Responsibilities
- Contracting Officers: Ensure contractors provide required insurance documentation and policy endorsements before work starts.
- Contractors: Obtain and maintain specified insurance, provide written notification, and exclude certain insurance costs from pricing.
- Agencies: Oversee compliance with insurance and liability provisions.
Practical Implications
This clause protects both the government and contractors by clearly allocating liability and requiring adequate insurance. Contractors must be diligent in securing and documenting insurance coverage and understanding which risks are their responsibility. Failure to comply can result in financial exposure or contract delays.