Why You Should Get a DBA Quote Before Bidding for a Government Contract

Why You Should Get a DBA Quote Before Bidding for a Government Contract


Last updated December 8, 2021 9 minutes read

If you work on government projects outside of the United States, then you probably know that you are required to have Defense Base Act (DBA) insurance that provides benefits ranging from disability to death benefits for your employees.  Did you also know that many government agencies allow this to be a direct line on your proposal so you DO NOT need to pay it out of your overhead?  But many companies don’t correctly include it in their proposal or underestimate the cost.  You can MAXIMIZE your return on contracts by working with an international insurance broker, like Clements Worldwide.

Why is DBA Insurance Important?

DBA insurance, or Defense Base Act insurance, is crucial for government contractors to have because it provides specific capitol benefits to injured employees, including medical, disability, death and burial benefits. It also provides government contractors a portion of any lost pay due to the at-work injury or endemic illness. All US government contractors and subcontractors working abroad must have DBA workers’ compensation insurance to cover injury or illness endured on the job.

Not getting DBA coverage can come with significant penalties. As government contracts have provisions that require bidding contractors to obtain appropriate insurance, failing to do so can result in fines, loss of contract, loss of potential future contracts, legal liability and even imprisonment.

Why is Getting a DBA Quote Important?

Getting a DBA quote is important because when you bid on a US Government contract, you want to have the most competitive DBA insurance price, and prices vary greatly between carriers. Your DBA costs can appear as just a line item on your expenses for a government contract. However, if you underestimate the costs, those costs can come directly out of your bottom line.

Additionally, underwriters often weigh the price of DBA insurance heavily on the risk level of your project, so before you select a plan, make sure you know:

Why Working Through a Broker to Obtain a DBA Quote is Valuable

DBA specialist brokers usually have relationships with all of the carriers that provide DBA coverage, making the process easier and quicker. Specialized brokers also understand which underwriter might potentially fit best, based on the type of work and the geography of the contractor. Additionally, some companies will only accept business through a broker or an agent and a broker can help you with the claims process.

Currently, only seven approved DBA insurance providers exist. Depending on the risk of the contract, your broker may decide to only market your risk to some DBA carriers. Since specialized brokers usually have relationships with the seven DBA insurance providers, they will also know each carrier’s preferences. For instance, some carriers only like large premium accounts, some only like low risk clerical/office type work and others have a larger spectrum of risk that will cover private security contractors operating in places like Iraq and Afghanistan.

The Information You Need to Get a DBA Quote

Getting DBA insurance contains multiple steps, so it’s a good idea to start ahead of time.

Once you have contacted a broker specializing in DBA insurance, you will need to complete the following:

After your broker has reviewed the information with the client, they will submit the risk to the DBA Market.  Most insurance carriers take 3-5 business days to respond to submitted risks, depending on their individual workload.  The underwriters will then respond by either asking for further clarification of terms or by releasing terms if everything is satisfactory. Since the coverage is standardized on a federal level, Kevin Pedone, a Clements Worldwide Sales Executive, says, “Choosing a carrier usually comes down to price or a combination of price and reputation around claims services.”


When bidding on a government contract, you should always contact a broker to get an estimate on all your insurance related needs. DBA is only one of the insurance policies you need, so make sure you check all your policies to see how they affect your insurance pricing. You need to give your broker 3-5 days to shop the market properly, as waiting until the last minute will most likely cause pricing issues in the future. 

By giving your broker advance notice that you are pricing a government project, you will limit your exposures to budgeting inefficiencies for your insurances. Since there are a limited number of DBA insurance providers and since DBA insurance is mandatory for all government contracts, you should always work through a broker specializing in DBA insurance to save time and money.


Learn more:

DBA Explained

What is Defense Base Act Insurance?

Defense Base Act (DBA) insurance provides benefits for employees who work on a U.S. government project outside of the United States, in the event that they are injured or killed. DBA benefits range from disability compensation to medical expenses and death benefits. Actual compensation depends on various factors, such as percentage of payroll, nationality, and the extent of the injury.

DBA insurance covers the following employee activities, regardless of the employee’s nationality:

For more details, please visit the U.S. Department of Labor.

Why is DBA Insurance Mandatory?

The DBA insurance requirements are identical to the Longshore and Harbor Workers’ Compensation Act (LHWCA) requirements. As such, every employer is required to secure insurance for the payment of worker’s compensation benefits or to be permissibly self-insured. Every employer is also liable for disability, medical, and death benefits for employees in the event of injury or death. Due to these requirements, companies must get proper DBA insurance for their employees. Your DBA costs can appear as just a line item on your expenses for a government contract, but if you under-estimate the costs it will come directly out of your bottom line.

Years ago, several sole source DBA markets that had pre-negotiated fixed rates existed. Contractors didn’t need to go through underwriting as the fixed rates were based on the U.S. contracting agency and the scope of the work that employees were doing. However, most of these markets are no longer available and contractors can no longer rely on those fixed rates.

Since contractors must go to the open market to procure DBA insurance, they need to get quotes for this coverage prior to submitting bid proposals. If a contractor estimates their DBA cost at 5% of payroll and win the contract, but then the market changes the rate to 15%, this may directly affect their profit margin.

A bad loss history also directly affects companies. Carriers may not provide DBA insurance to contractors who run bad losses, or they may get higher rates, which means contractors who run a bad claims or loss history may lose future government contracts. Pedone states, “This will end up creating a market for risk managers to run their operations with as little losses as possible, as getting favorable DBA rates will create a competitive edge in the bidding process.”

Companies should have defined training, procedures, and security policies in place to help prevent claims before they happen. They should also review and manage claims for trends that could be avoided in the future to lower losses. ;As stated, not only will this help lower your costs, but may also make your bid more competitive to win more business.


How DBA Insurance Works

All U.S. government contractors and subcontractors working abroad are required to have Defense Base Act (DBA) workers’ compensation insurance to cover employees’ injury, illness, or death. But how does one acquire this type of specialized insurance?

The infographic below showcases how the DBA insurance market works. It then walks you through the process of getting the best price quote for your needs.

Clements Worldwide has access to all eight insurance carriers who specialize in DBA insurance and are actively writing coverage. For a no-cost consultation, contact us at +1.800.872.0067 or click on the button above to submit your information and get quotes for the top DBA insurance providers.

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