Contractors with DBA Insurance coverage expiring in the next twelve months through the U.S. Army Corps of Engineers (USACE) program need to be aware that the end of the program on October 1, 2013, will affect their existing project bids/awards. Because DBA Insurance must be purchased on the open market when their current policy expires, contractors with a 12-month contract using a construction rate of $4.25 on the bid, for example, could see a construction rate increase to as much as $8.00-$10.00 for the performance period remaining on their existing contract. Similarly, a contractor not currently insured through the USACE program with a contract bid awarded after October 1st, will have to market their contract award to obtain an updated DBA rate/proposal.

Contractors in either one of these situations may be able to get help from their USACE Contracting Officer (CO) by requesting that their existing contract be modified to reflect the higher DBA premium they will be required to pay for the remainder of the contract. The modification will allow for additional funding needed to cover the additional DBA premium. However, if a contract is a “firm fixed” price contract, the contractor could face resistance from their CO regarding modifications. In this situation, the CO may opt to contact the USACE headquarters for clarification of their position.

As contractors begin their search for DBA Insurance coverage on the open market, they will undoubtedly be presented with significantly higher rates, and their DBA premium will most certainly increase. As a frame of reference, current USACE DBA rates are based on four classes of employees:

• Service: $3.50 per $100.00 of payroll

• Construction & Mechanics: $4.25 per $100.00 of payroll

• Security: $10.00 per $100.00 of payroll

• Aviation: $17.00 per $100.00 of payroll

Now is the time to begin the search for a replacement DBA Insurance policy in order to secure the best possible rates. The LATITUDE DBA Insurance program is an excellent resource for contractors seeking DBA Insurance in the open market, and offers very competitive rates. Our team of experts has more than 25 years of experience and extensive knowledge of the DBA marketplace. Contact the LATITUDE DBA Insurance program today to explore your coverage options.

In 1941, the Defense Base Act was passed to ensure that Workers’ Compensation coverage and benefits were afforded to employees traveling overseas under a U.S. Government contract to work on military bases and other public works and construction projects. Under the Act, contractors are required to purchase DBA Insurance coverage for all employees working overseas, regardless of the length of their employment.

Overseas travel is defined in the Act as that travel which occurs outside of the continental United States and U.S. territories and possessions. One exception is the U.S. Territory of Guam, where DBA Insurance is waived, and all work performed under a U.S. Government contract is subject to a local tariff-rated Workers’ Compensation system.

Coverage for Work in the U.S.

DBA Insurance coverage also applies to work performed in the Continental U.S. in some instances, and must be included as part of the written contract. For example, employees are eligible for DBA benefits while participating in pre-deployment training in the U.S. that is required in order to perform the overseas work. In such cases, coverage is afforded only while the training is in progress. If deployment to the overseas location takes place immediately following the training, DBA Insurance coverage continues without interruption. If there is a gap in time from when training ends and when the employees are deployed, DBA coverage ends at the conclusion of the training period and resumes upon deployment.

The LATITUDE DBA Insurance program understands the complexities and unique business needs associated with government contracts and the Defense Base Act. Contact the LATITUDE DBA Insurance program today to explore your DBA coverage options.

As the United States Army Corp of Engineers (USACE) DBA program winds down, contractors need to be aware that the shift to the open market may have an impact on their DBA Insurance rates.

For example, the rate charged for service work in the old USACE DBA program was $3.50 per $100 of payroll, and this is a fairly typical rate charged in the open market by most DBA Insurance carriers. The rate for construction work in the USACE program, however, was atypical at $4.25 per $100 of payroll. The average open market rate for light construction work is $8.00 per $100. At nearly double the rate, businesses rated for construction work should prepare to see a big increase in their DBA premium. The LATITUDE DBA Insurance Program, a DBA Insurance broker for Allied World Assurance, offers a light construction rate well below the average open market rate, at $5.50 per $100, for eligible contractors. A rate savings of this degree could have a substantial impact on your bottom line.

Businesses also need to be aware of the overall minimum premium imposed by DBA carriers. The standard minimum premium is $9,000. This means that even if calculated premium is less than $9,000, the $9,000 minimum will be charged. If the total premium is above $9,000, the Underwriter will calculate a minimum premium and can request that this amount be the minimum earned (the amount of premium they are guaranteed to receive even if the policy is cancelled, or it is determined at the end of the policy term that the actual payroll was less than estimated when the policy was purchased).

These rate changes are an important considerations for contractors insured in the USACE program. The LATITUDE DBA Insurance team of experts has more than 25 years of experience and extensive knowledge of the DBA marketplace, and they can assist you in exploring your coverage options. If your insurance is currently with the USACE DBA program and expires October 1, 2013 or after, contact the LATITUDE DBA Insurance program today to get started.