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Coverage and Insurance Requirements Government Contractors Need

SAHOURI
Author
SAHOURI
Published
August 5, 2022

Government contractors need plenty of coverage and insurance requirements to move things along. Also, government contractors typically have different concerns from private firms, the most significant of which are related to liabilities.

 

Because of the unique nature of their relationships with their clients, any errors or missteps can be very costly. Worse still, they could risk severe legal consequences, some of which could jeopardize the company's future.

 

What You Will Learn

For this reason, U.S. government contractors take insurance coverage concerns very seriously. Most take extra measures to protect themselves from potential legal liabilities that could threaten their company reputations and their professional relationships with their clients. These measures may include hiring third-party insurance consultants to guide them on proper procedure and conformance with insurance requirements

 

The Challenge of Working for Government

The many job limitations are among the key challenges of working as a government contractor. Government contractors are often subject to strict restrictions regarding the information they share or the areas they visit. These factors often add to the difficulties that most other companies in their industries typically face, necessitating increased due diligence. 


Government contractors are companies or individuals that provide goods and services to government organizations. Competing firms select the contractors and are granted contracts via a bidding process. Bidders receive contracts based on their ability to work with their clients' budgets and offer the required quality of products and services. 

 

Government contracts can come from federal, state, or local government agencies. Contracting firms vary in size, so companies need to bid only for contracts they can reasonably accomplish.

 

The Service Contract Act of 1965

Most companies are legally obligated to provide their employees with benefits and compensation packages. But government contractors are also subject to the Service Contract Act of 1965. This labor law mandates that all workers under contract with the government receive fair wages. It is supplementary to the benefits companies typically offer to attract and retain quality employees. 

 

Errors and Omissions Insurance

Companies that provide advisory or consultancy services to their clients will use E&O or Errors and Omissions insurance. It covers potential liabilities that may arise from company personnel giving erroneous information or advice to clients. 


Government contractors generally benefit from E&O insurance due to their frequent access to sensitive information. Government agencies are usually concerned about this information falling into the wrong hands or unauthorized parties accessing it. With E&O insurance, companies receive protection from potential liabilities resulting from sharing or divulging this information due to human error or negligence. 

 

Overseas Government Contracts

Government contracts often take contractors to different places, sometimes in far-off countries. But overseas employees need just as much insurance protection as domestic workers. Likewise, overseas workers may need more and better coverage due to the unique challenges of working abroad. 

 

Some insurance firms offer their clients Defense Base Act (DBA) plans. This insurance provides overseas workers in government contracts similar benefits as domestic workers. In most cases, these plans cover disability, medical need, and death, offering the appropriate benefit to the policyholder's beneficiaries. 

 

Cost of Coverage Examples

Aircraft comes into handy when dealing with government contracts, and government-regulated flights must apply these measures. For example, it could take approximately $200,000 to cover one person and $500,000 if the passenger suffered an injury on the flight. The costs for property damage could be up to $200,000. Likewise, it may take about $200,000 at the minimum for injuries suffered multiplied depending on the passengers on the flight. 

 

SAHOURI
SAHOURI
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