Overview
This section specifies the methods by which a contractor may provide insurance coverage for loss of or damage to Government property when such insurance is required or approved by the Government.
Key Rules
- Method of Coverage: Insurance may be provided through specific, standalone policies or by incorporating the risks into the contractor’s existing insurance policies.
- Disclosure Requirement: Any policy used to cover Government property must explicitly disclose the Government’s interest in that property.
- Regulatory Linkage: This section operates in conjunction with FAR 45.104, which establishes the underlying principles for contractor responsibility and liability for Government property.
Practical Implications
- Contractors must coordinate with their insurance carriers to ensure that "Government interest" is formally noted on policies or endorsements to remain compliant with contract terms.
- The choice between a specific policy or an existing policy rider often depends on a cost-benefit analysis regarding premiums and the total value of the Government property managed under the contract.