Overview
FAR 28.307 outlines the mandatory insurance types and minimum liability coverage limits required for contractors and subcontractors performing cost-reimbursement contracts. It also establishes administrative requirements for the approval of group insurance plans and the treatment of premium refunds.
Key Rules
- Prior Approval for Group Plans: Contractors must obtain agency approval before purchasing group insurance plans or making significant benefit changes that could substantially increase costs to the Government.
- Premium Refunds: Any refunds or credits received by the contractor regarding insurance premiums must be shared with the Government.
- Workers’ Compensation: Contractors must comply with all applicable Federal and State statutes; if occupational diseases are not covered by statute, they must be covered under the employer's liability section (minimum $100,000).
- General Liability: Contractors are required to maintain comprehensive bodily injury liability insurance of at least $500,000 per occurrence.
- Automobile Liability: Coverage is required for all automobiles used in contract performance, with minimums of $200,000 per person and $500,000 per occurrence for bodily injury, and $20,000 for property damage.
- Specialized Liability: The regulation sets specific minimums for aircraft public and passenger liability and requires vessel collision and indemnity insurance as determined by the agency.
Practical Implications
- Contractors must ensure their existing insurance policies meet these specific FAR minimums to ensure premiums are allowable and reimbursable costs.
- Administrative teams should establish clear protocols for seeking Contracting Officer approval before renewing or altering group insurance benefits to avoid potential cost disallowances.