Defense Base Act (DBA) Insurance is an enhanced form of Workers’ Compensation that is specific to contractors performing work overseas under a Government contract. Contractors are required to purchase DBA Insurance just like employers in the United States are required to purchase Workers’ Compensation Insurance to cover employees stateside based on state statutes.
Outlined below are some basic coverage benefits* for both Defense Base Act Insurance and domestic Workers’ Compensation to help clarify the difference between the two.
Defense Base Act Benefits
The Defense Base Act is a division of the U.S. Department of Labor’s Longshore and Harbor Workers’ Compensation Act that was enacted in 1941 to cover U.S. civilian workers while working overseas under U.S. Government contracts. DBA benefits provided to contracted employees include:
- Loss of wages during the recovery process if an employee is injured during the course of his or her work and not able to continue working (up to a cap of 66-2/3% of his/her weekly wage)
- Medical expenses related to the claim
- Medical evacuation authorized by the treating physician
- Death benefits
- Treatment for diseases endemic to an area such as Malaria, Tuberculosis and Baghdad Boil (a skin disease transmitted by sand flies) contracted while working in foreign lands
A maximum amount payable to any employee under DBA is currently set at $1,346.68 per week. This amount is reviewed annually on October 1st by the Department of Labor and, if applicable, a Cost of Living Adjustment (COLA) may be assessed.
War Risk Hazards
In some instances, injuries and deaths incurred while working overseas are caused by “war risk hazards”. The War Hazard Compensation Act (WHCA)—a section under the Defense Base Act—provides benefits to cover this risk. Under the WHCA, reimbursement is provided to contractors for benefits that result from injury or death caused by the risks of war or terrorist activities. War risk hazards include actions such as:
- Discharge of weapons
- Any action by a hostile force or person, including insurrection or rebellion
- Discharge of munitions intended for use in war
- Collision of vessels and aircraft operating without customary navigation aids
- Operation of a vessel or aircraft in a zone of hostility or engaged in war activities.
Benefits for “capture and detention” are also included under the WHCA for any employee who is taken by force as a prisoner or hostage while working under a contract that requires DBA coverage. While detained, an employee is entitled to total disability benefits at a rate of 100% of his or her average weekly wage at the time of capture, for up to 12 months time. Seventy percent of this benefit amount may be disbursed to the employee’s dependents in the U.S. If the employee is still detained after one year, the claim reverts back to a standard DBA claim, and death benefits payable under the Employer’s DBA policy begin. A kidnapping incident should be immediately reported and filed as a DBA claim with the DBA Insurance carrier who will direct the claim to the Department of Labor for proper handling.
Domestic Workers’ Compensation Benefits
Workers’ Compensation—also called Work Comp or Workman’s Comp—is a form of insurance that provides benefits to employees who suffer injury or illness as a result of their job-related duties. The requirements for employers to purchase Workers’ Compensation are determined at the individual state level, and can vary depending on the number of employees and gross payroll amount.
Benefits under Workers’ Compensation include compensation for:
- Lost wages
- Medical expenses
- Rehabilitation expenses
- Death benefits
Benefit amounts and stipulations are also regulated at the state level, as is the cap on the maximum weekly wage an injured employee can receive. Current maximum weekly wages range from $500 to over $1,000 per week—substantially lower than the weekly maximum provided under DBA.
The Workers’ Compensation claim process (including payment of benefits), is conducted between the employee, the employer and the employer’s insurance company, and is not monitored by the state. If an employee is dissatisfied with how their Work Comp claim is managed, they may file an appeal with their state’s Compensation Commission.
In most cases, an employee on a permanent disability Workers’ Compensation benefit can negotiate a lump sum settlement in lieu of continuing to receive weekly permanent disability payments. Permanent (or lump sum) settlements are not governed or approved by the state but are negotiated between the employee and the insurance carrier, often with the guidance of legal counsel and, in most states, authorized by a Workers’ Compensation judge.
One Source for Global Coverage
Government contractors often have the need to cover both U.S.-based employees and OCONUS employees. The LATITUDE DBA Insurance Program has the know-how and expertise to assist contractors with all their business insurance needs, both foreign and domestic, and can help simplify the insurance buying process. Contact us to begin a risk assessment today.
*The information provided in this article is not intended as a full assessment of DBA Insurance or Workers’ Compensation. For specific information about your state’s Work Comp requirements and benefits, visit your state’s Department of Labor website. For additional information about Defense Base Act Insurance, visit The U.S. Department of Labor website.