FAR 52.228-8—Liability and Insurance-Leased Motor Vehicles.
Plain-English Summary
FAR 52.228-8, Liability and Insurance—Leased Motor Vehicles, allocates risk when the Government leases motor vehicles for contract performance. It addresses who bears responsibility for damage to leased vehicles, loss or injury to third parties, contractor liability for negligent acts, required insurance coverage and minimum limits, notice to the contracting officer before work begins, required policy endorsements for cancellation or material change, the prohibition on insurer subrogation against the Government, and pricing rules that keep the contractor from charging the Government for risks the Government itself must bear. In practice, the clause is meant to prevent disputes over vehicle-related losses by clearly separating Government-responsible losses from contractor-caused losses and by ensuring the contractor carries insurance for its own liability. It is especially important where contractors operate leased vehicles on or off Government property, because motor vehicle incidents can create property damage, bodily injury, and tort claims quickly. The clause also ties directly to the Federal Tort Claims Act, so the Government’s exposure depends on whether the claim is one for which the United States would be liable under that statute. For contracting officers, the clause is a risk-allocation and compliance tool; for contractors, it is a mandatory insurance and indemnity obligation that must be in place before performance starts.
Key Rules
Government bears certain losses
The Government is responsible for loss of or damage to leased vehicles, except for normal wear and tear and damage caused by the contractor, its agents, or employees. The Government is also responsible for third-party property damage, injury, or death only when the Government would be liable under the Federal Tort Claims Act.
Contractor liable for its fault
The contractor is liable for claims arising from the fault, negligence, or wrongful act or omission of the contractor, its agents, or employees. The contractor must also indemnify and hold the Government harmless against those claims.
Insurance is mandatory
The contractor must maintain insurance covering its liabilities under paragraph (b). Minimum required limits are $200,000 per person and $500,000 per occurrence for death or bodily injury, and $20,000 per occurrence for property damage or loss.
Notice before performance
Before starting work, the contractor must notify the contracting officer in writing that the required insurance has been obtained. This is a condition tied to commencement of performance, not a later administrative formality.
Policy protections for Government
The insurance policies must include an endorsement preventing cancellation or material adverse change from taking effect until the longer of the state-required notice period or 30 days after written notice to the contracting officer. The policies must also exclude insurer subrogation claims against the Government.
No pricing for Government risk
The contract price must not include insurance costs or contingency amounts for losses, damage, injury, or death that are the Government’s responsibility under paragraph (a). Contractors may not build Government-borne risk into their pricing for this clause-covered exposure.
Responsibilities
Government
Accept responsibility for loss of or damage to leased vehicles, except for normal wear and tear and contractor-caused damage. Also bear third-party property damage, injury, or death when the Government is liable under the Federal Tort Claims Act.
Contractor
Remain liable for losses caused by its own fault, negligence, or wrongful acts or omissions, and indemnify and hold the Government harmless for resulting claims. Obtain and maintain the required insurance, provide written notice to the contracting officer before work begins, ensure the policy endorsements are in place, and avoid charging the Government for risks assigned to the Government.
Contracting Officer
Ensure the clause is included when prescribed, verify the contractor has provided written notice of required insurance before performance begins, and confirm the policy terms include the required cancellation, material-change, and subrogation protections.
Insurer
Issue policies that cover the contractor’s liabilities under the clause, include the required notice protections for cancellation or material change, and waive subrogation claims against the Government.
Practical Implications
This clause is a risk-allocation rule, not just an insurance requirement: it determines who pays when a leased vehicle is damaged or when a third party is injured.
Contractors should confirm their auto or general liability coverage actually matches the clause’s required limits and covers leased vehicles and the specific operations being performed.
A common pitfall is assuming the Government will cover all vehicle-related losses; contractor negligence remains the contractor’s responsibility, even if the vehicle is leased for Government work.
Contracting officers should not let performance start until the contractor has provided written proof that the required insurance is in place and the policy endorsements are acceptable.
Pricing should be reviewed carefully so the contractor does not include contingency or insurance costs for risks that the clause places on the Government, which can create audit and negotiation issues.
Official Regulatory Text
As prescribed in 28.312 , insert the following clause: Liability and Insurance-Leased Motor Vehicles (May 1999) (a) The Government shall be responsible for loss of or damage to- (1) Leased vehicles, except for- (i) Normal wear and tear; and (ii) Loss or damage caused by the negligence of the Contractor, its agents, or employees; and (2) Property of third persons, or the injury or death of third persons, if the Government is liable for such loss, damage, injury, or death under the Federal Tort Claims Act ( 28 U.S.C. 2671 - 2680 ). (b) The Contractor shall be liable for, and shall indemnify and hold harmless the Government against, all actions or claims for loss of or damage to property or the injury or death of persons, resulting from the fault, negligence, or wrongful act or omission of the Contractor, its agents, or employees. (c) The Contractor shall provide and maintain insurance covering its liabilities under paragraph (b) of this clause, in amounts of at least $200,000 per person and $500,000 per occurrence for death or bodily injury and $20,000 per occurrence for property damage or loss. (d) Before commencing work under this contract, the Contractor shall notify the Contracting Officer in writing that the required insurance has been obtained. The policies evidencing required insurance shall contain an endorsement to the effect that any cancellation or any material change adversely affecting the interests of the Government shall not be effective (1) for such period as the laws of the State in which this contract is to be performed prescribe or (2) until 30 days after written notice to the Contracting Officer, whichever period is longer. The policies shall exclude any claim by the insurer for subrogation against the Government by reason of any payment under the policies. (e) The contract price shall not include any costs for insurance or contingency to cover losses, damage, injury, or death for which the Government is responsible under paragraph (a) of this clause. (End of clause)