FAR 28.3—Subpart 28.3

Policy.

FAR 28.301 states the Government’s basic policy on when contractors must carry insurance and when the Government may limit, approve, or waive certain coverage. It covers contractors subject to CAS 416, mandatory insurance required by law or regulation, insurance needed to protect Government property or interests, the Government’s right to disapprove insurance that is not in its interest, how insurance costs are evaluated for allowability under FAR 31.205-19, special treatment for contracts performed outside the United States and its outlying areas, coordination among multiple agencies reviewing a contractor’s insurance program, and a special rule for nonpersonal services contracts for health care services requiring medical liability insurance and indemnification. In practice, this section tells contractors what coverage they must maintain and tells contracting officers and agency reviewers when they can require, reduce, or reject coverage. It is important because insurance affects contract risk allocation, pricing, compliance, and the Government’s ability to recover for loss, damage, or liability. The section also links directly to other FAR provisions and external legal requirements, so it is not a stand-alone rule but part of a broader risk-management framework.

Notice of cancellation or change.

FAR 28.302 addresses how the Government protects its interest when a contractor is required to maintain insurance or self-insurance. It covers two related topics: first, the required policy endorsement for insurance provided by an insurer, and second, the restriction on changing or reducing self-insurance coverage. In the insured-coverage context, the section requires an endorsement stating that any cancellation or material change that would adversely affect the Government is not effective unless written notice is given in the manner and timeframe required by the contracting officer. In the self-insurance context, the contractor may not change or decrease the coverage without prior approval from the administrative contracting officer, with a cross-reference to FAR 28.308(c). Practically, this section ensures the Government is alerted before coverage disappears or is weakened, so it can assess risk, enforce contract requirements, and avoid gaps in protection.

Insurance against loss of or damage to Government property.

FAR 28.303 addresses insurance for loss of or damage to Government property when the Government requires or approves that coverage. It explains two acceptable ways to satisfy the requirement: a separate, specific insurance policy or coverage built into the contractor’s existing insurance program. The section also requires that the insurance policy disclose the Government’s interest in the property, so the insurer and all parties understand that the property is not solely the contractor’s. In practice, this provision matters whenever Government-furnished property, Government-owned property in the contractor’s possession, or other covered Government property is at risk and the contracting arrangement calls for insurance protection. Its purpose is to make sure the Government’s ownership interest is recognized and protected, while giving contractors flexibility in how they structure the coverage.

Risk-pooling arrangements.

FAR 28.304 addresses agency risk-pooling arrangements, which are cooperative insurance-related structures agencies may set up to manage risk more efficiently. The section covers two core subjects: the authority of agencies to establish these arrangements and the requirement that the responsible agency designate a single manager or point of contact for each arrangement. Its purpose is to help the Government obtain safety engineering support and claims handling services from the insurance industry at the lowest practical cost. In practice, this means agencies can pool resources or participate in arrangements that centralize insurance-related expertise, but they must also ensure clear internal governance so the arrangement has one accountable lead. For contracting officers and program officials, the section signals that these arrangements are permissible, but they must be organized and managed in a way that avoids confusion, duplication, and unnecessary administrative cost.

Overseas workers’ compensation and war-hazard insurance.

FAR 28.305 explains how overseas workers’ compensation and war-hazard protection work when federal contracts involve employees working outside the United States. It defines the term "public-work contract," explains when the Defense Base Act (DBA) extends Longshore and Harbor Workers’ Compensation Act benefits to overseas employees, and describes how the War Hazards Compensation Act adds protection for war-related risks such as injury, death, capture, or detention. The section also addresses the relationship between DBA coverage and contractor-provided insurance or self-insurance, and it explains the special rule that if the DBA is waived, war-hazard benefits are also waived for the affected employees. Finally, it covers the contractor’s obligation to provide alternative workers’ compensation coverage and war-hazard liability protection when a waiver applies, and it requires the contract to allow the related costs as allowable contract costs. In practice, this section matters because it determines who must be insured, what risks must be covered, when waivers are possible, and how those insurance or liability costs are treated in the contract price.

Insurance under fixed-price contracts.

FAR 28.306 explains when and how insurance requirements may be imposed in fixed-price contracts, even though the Government normally does not concern itself with a contractor’s insurance on fixed-price work. It identifies the special circumstances that can justify agency-specified insurance requirements: when the contractor is principally engaged in Government work, when Government property is involved, when the work will be performed on a Government installation, or when the Government chooses to assume risks the contractor would ordinarily insure commercially. The section also addresses the specific case of work on a Government installation and ties those contracts to the clause at 52.228-5, Insurance—Work on a Government Installation. It explains that, when that clause is required by FAR 28.310, the insurance coverage in 28.307 is the minimum required and must be stated in the contract, while the contracting officer may require more coverage or higher limits. If the clause is included voluntarily because the contracting officer believes it benefits the Government, the contracting officer has flexibility to omit some types of coverage or reduce limits as appropriate. In practice, this section helps contracting officers decide when insurance terms belong in a fixed-price contract and helps contractors understand when they may face specific insurance obligations beyond their normal commercial coverage.

Insurance under cost-reimbursement contracts.

FAR 28.307 addresses insurance requirements for cost-reimbursement contracts and, when the prime contract flows down the requirement, for subcontracts as well. Its core purpose is to make sure the Government is protected against loss, damage, and liability risks that can arise while a contractor is performing reimbursable work, where the Government ultimately bears most allowable costs. This section points readers to FAR 28.307-2 for the specific types of insurance ordinarily required and the minimum liability amounts, and it also directs attention to FAR 28.308 for self-insurance as an alternative or supplement in appropriate cases. In practice, this means contracting officers must ensure the contract includes the right insurance coverage terms, contractors must maintain and document coverage that meets the contract’s requirements, and subcontractors may be bound when the prime contract’s insurance terms are extended down the chain. The section is important because insurance shortfalls can create performance risk, cost allowability issues, and exposure to uninsured claims during contract performance.

Self-insurance.

FAR 28.308 addresses when and how a contractor may use self-insurance in connection with Government contracts, and when the Government may approve, condition, or reject such arrangements. It covers the threshold for mandatory submission and approval of a proposed self-insurance program, the required contents of the submission, approval standards for self-insurance generally and for workers’ compensation/employer’s liability, the need to seek approval for major program changes, the financial and operational factors the contracting officer must evaluate, the prohibition on approving self-insurance for catastrophic risks, and the prohibition on using self-insurance to cover the contractor’s own defects in materials or workmanship. In practice, this section is about protecting the Government from bearing unreasonable insurance-related costs or losses while still allowing contractors flexibility to manage ordinary business risks when doing so is cost-effective and in the Government’s interest. It also ties directly to cost allowability under FAR 31.205-19, so approval of a program is not just an administrative formality; it affects whether self-insurance costs can be treated as allowable contract costs. Contractors need to document the program thoroughly, demonstrate financial capacity, and keep the Government informed of material changes. Contracting officers need to evaluate both the economics and the risk profile before approving or continuing approval.

Contract clauses for workers’ compensation insurance.

FAR 28.309 tells contracting officers which workers’ compensation insurance clause to include in solicitations and contracts when overseas work creates coverage issues under the Defense Base Act (DBA) or, in limited cases, when DBA coverage is waived. It covers two specific clauses: FAR 52.228-3, Workers’ Compensation Insurance (Defense Base Act), and FAR 52.228-4, Worker’s Compensation and War-Hazard Insurance Overseas. The section ties clause selection to three key factors: whether the contract is a public-work contract performed outside the United States, whether the contract is approved or financed under the Foreign Assistance Act of 1961, and whether the Secretary of Labor has waived DBA applicability. In practice, this section is a clause-selection rule, not a coverage-determination rule; the contracting officer must first determine whether DBA applies under FAR 28.305 and then insert the correct clause. The purpose is to ensure contractors understand and price the required insurance obligations for overseas labor, including compensation and war-hazard risks where applicable. For contractors, the practical significance is that the required insurance can materially affect cost, compliance, subcontracting, and mobilization planning on overseas projects.

Contract clause for work on a Government installation.

FAR 28.310 tells contracting officers when to include the insurance clause at FAR 52.228-5, Insurance—Work on a Government Installation, in solicitations and contracts. It applies when the Government is using a fixed-price contract, the expected contract value is above the simplified acquisition threshold, and the work will require performance on a Government installation. The section also identifies two exceptions: when only a small amount of on-installation work is needed, such as a few brief visits per month, and when all on-installation work will be performed outside the United States and its outlying areas. Even when one of those exceptions applies, the contracting officer may still include the clause if doing so is in the Government’s interest. In practice, this provision is about making sure contractors carry appropriate insurance for work performed on Government property, while giving contracting officers flexibility to tailor the requirement to the actual risk and location of performance.

Solicitation provision and contract clause on liability insurance under cost-reimbursement contracts.

Contract clause for insurance of leased motor vehicles.

FAR 28.312 is a very short but important prescription rule that tells contracting officers when to include the clause at FAR 52.228-8, Liability and Insurance—Leased Motor Vehicles. It applies to solicitations and contracts for the leasing of motor vehicles and directs the government to use the clause whenever the acquisition involves leased vehicles, with the related leasing guidance found in FAR subpart 8.11. In practice, this section exists to make sure the contract clearly allocates liability and insurance responsibilities for leased vehicles, rather than leaving those issues to assumption or after-the-fact dispute. It matters because motor vehicle leasing creates distinct risk exposure for damage, injury, and third-party claims, and the clause helps ensure the contractor maintains appropriate insurance coverage and understands the government’s expectations. For contracting officers, this is a mandatory clause-insertion requirement, not a discretionary one, so the key task is identifying when the procurement is for leased motor vehicles and ensuring the clause is included in the solicitation and resulting contract.

Contract clauses for insurance of transportation or transportation-related services.

FAR 28.313 tells contracting officers when to require insurance clauses in solicitations and contracts for transportation or transportation-related services. It covers two specific insurance topics: cargo insurance and vehicular/general public liability insurance. For cargo, the rule generally requires use of the clause at 52.228-9, Cargo Insurance, unless the freight is shipped under rates subject to released or declared value, which is an exception that can make separate cargo insurance unnecessary or inappropriate. For liability coverage, the rule requires a clause substantially the same as 52.228-10, Vehicular and General Public Liability Insurance, when the contracting officer decides that insurance required by law does not provide enough protection. In practice, this section helps the Government allocate and manage risk for loss, damage, injury, and third-party claims arising from transportation performance. It also gives contracting officers discretion to tailor insurance requirements to the actual risk and to avoid duplicative coverage where statutory or tariff-based protections already apply.