With the surge of violence in the Ukraine by opposition leaders of the current government, a pointed question should be evoked in the minds of contractors who currently have employees working overseas in hostile regions: Are acts of war or terrorism covered by Defense Base Act Insurance?
An employee stationed in the Ukraine is injured on his way to work by actions resulting from political unrest in the area. Would the DBA Insurance policy cover the injury claim? In most cases, the answer is yes, the claim would be covered because the situation of unrest would be classified as an armed conflict. As defined in the Defense Base Act, DBA Insurance includes a benefit for claims stemming from acts of “war or terrorism”:
“A ‘war-risk hazard’ is a hazard arising during war in which the United States is engaged; during an armed conflict in which the United States is engaged, whether or not war has been declared; or during a war or armed conflict between military forces of any origin, occurring within any country in which a covered individual is serving.
Discharge of a missile, including liquids and gas, or the use of any weapon, explosive or other noxious thing by a hostile force or person or in combating an attack or a perceived attack by a hostile force or person.
Action of a hostile force or person, including rebellion or insurrection against the United States or any of its allies.”
This legal definition of a “war-risk hazard” as it relates to DBA does not specifically address attacks as carried out by terrorists. However, the Department of Labor procedures do give careful consideration for acts of terrorism as “war-risk hazards” when assessing claims.
Substantiation of the DOL’s consideration
An attack on a Bosnian Postal Office in the early 2000’s resulted in the death of one government contract employee and injured 11 others. The death and injury claims were regarded as “caused by a terrorist attack,” even though the attacker acted alone. The Department of Labor reimbursed the DBA carrier for the compensation they had paid to the beneficiaries to settle the claim.
While claims founded by terrorist activity are given careful consideration under the “war-risk hazard” rule, detailed facts of the incident and situation of hostility must be presented by the DBA carrier in order to establish valid reason for reimbursement of the benefits owed to the claimant. The bottom line is, terrorist activity will be considered for DBA claim payment in conjunction with the definition of “war-risk hazard.”
As the DBA Insurance broker for Allied World Assurance, the LATITUDE DBA Insurance team has a deep understanding of the complexities of Defense Base Act coverage. Contractors seeking DBA coverage should contact LATITUDE DBA Insurance today―we’d be happy to assist in creating an insurance plan that protects both the business and its employees against all overseas exposures.