Insurance Provisions
Acquisition of
Time And Relative Dimension In
Space (TARDIS) Capsule
Govt PCO: Colleen Bertone, Contracting Officer, Hanscom Air Force Base
Sub: Jennifer Izzo, Corporate Counsel, The Charles Stark Draper Laboratory, Inc.
Prime: Allie Stanzione, Contracts Negotiator, Raytheon Company
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Agenda

Types of Insurance

Typical Insurance Requirements in Government Prime and
Subcontracts

How Insurance Clauses Work With Indemnification Clauses

Disputes Clause
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Types of Insurance

Comprehensive General Liability Insurance & Umbrella Liability

Comprehensive Automobile Liability

Workmen’s Compensation/Employer’s Liability Insurance

Overseas Workers Compensation and War Hazard Insurance

Aircraft Public and Passenger Liability Insurance

Vessel Liability Insurance

Cargo Insurance

Work on the Government Installation

Insurance Against Loss of or Damage to Government Property
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Setting the Scene……
The TARDIS

Time And Relative Dimension In Space

Space-time vehicle

Flies through space and time by de- and
re-materializing
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Setting the Scene……
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Setting the Scene……
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General Liability Insurance &
Umbrella Liability Coverage

Covers bodily injury and/or property damage
to third parties caused by acts or omissions of
the insured party

FAR § 28.307-2 requires bodily injury liability
insurance in the minimum amount of $500,000
per occurrence
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The Prime’s General Liability Clause
The Contractor shall effect and maintain the following insurance:

Commercial general liability, including personal injury and if
applicable, product liability/completed operations coverage,
in the minimum amount of $2,000,000 personal injury,
$2,000,000 per occurrence, $2,000,000 general aggregate,
and $2,000,000 product/completed operations aggregate; and

Umbrella Liability having limits of $300,000,000 aggregate.
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Additional Insured Clause
“All insurance required herein shall be endorsed to
include the PRIME, its officers and employees as
additional insured and shall not be reduced or canceled
without 30 days prior written notice to the PRIME.”
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Waiver of Subrogation Clause
“Company A waives all rights against the Company B
for damages caused by any peril to the extent covered
by insurance provided under the insurance requirements
of this Agreement. Company A shall require similar
waivers by Subcontractors. All insurance policies
required hereunder shall permit and recognize such
waivers of subrogation.”
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Comprehensive Automobile Liability

Comprehensive Automobile Liability covers bodily injury
and/or property damage to third parties due to act or omission
committed by a company or its employees arising from the use
of company owned or non-owned vehicles.

FAR § 52.228-10 / 28.307-2(c) requires injury and property
damage liability covering the operation of all automobiles used
in performance of the contract. The minimum limits are
$200,000 per person and $500,000 per occurrence for bodily
injury and $20,000 per occurrence for property damage.
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The Prime’s Auto Liability Clause
“The subcontractor must carry automobile liability
coverage for owned, hired and non-owned vehicles in
the minimum amount of $400,000,000 per occurrence
combined single limit.”
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Workmen’s Compensation / Employer’s
Liability Insurance

Covers medical expenses and lost wages for
employee injuries arising out of the course
and scope of employment.

FAR § 52.228-3 / § 28.307(a): Must carry
employer’s liability for accidental bodily
injury or death and occupational disease with
a minimum liability limit of $100,000.
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Prime’s Worker’s Compensation Clause
“Subcontractor must carry a policy of
Worker’s Compensation that meets the
statutory obligations imposed by law in the
state in which the work under this agreement
is to be performed.”
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Work on the Government Installation

Covers contractor’s or subcontractor’s work at a
Government facility/installation.

FAR §52.228-5: Contractor and subcontractor
working at a government installation must provide
and maintain the minimum insurance requirements
listed in the FAR for worker’s comp, employer’s
liability, commercial general liability and automobile
liability.
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Overseas Workers Compensation and
War Hazard Insurance

Covers employees working or traveling
overseas or in war zone areas.

FAR § 52-228-3 and § 52-228-4, and §
28.305
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Insurance Against Loss of or Damage
to Government Property

Covers damage to government property
(except to the extent covered by contractor’s
insurance policy).

FAR § 52.228 / § 52.246-25
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Aircraft Public and Passenger
Liability Insurance

Covers contractors if an aircraft is used in connection with
performance of the contract.

FAR § 28.307-2(d) requires coverage of at least $200,000 per
person and $500,000 per occurrence for bodily injury, other
than passenger liability, and $200,000 per occurrence for
property damage. Coverage for passenger liability bodily injury
shall be at least $200,000 multiplied by the number of seats or
passengers, whichever is greater.
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Vessel Liability Insurance

Required when contract performance involves
use of vessels.

FAR § 28.307-2(e) does not prescribe amounts for
vessel collision liability, as these values are
determined by the agency based on the contract size,
value, type of work performed.
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Cargo Insurance

Covers cargo in the care, custody, or control of the carrier.
Risks covered are the non-delivery, including theft, loss of
shipment due to a collision, explosion or burning the
transportation provider, damages due to the bad weather,
flood, mud and grease.

FAR § 52.228-9 requires the total value of the property in the
shipment be insured.
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Insurance and Indemnification

Indemnification is a promise by one party to take
financial responsibility for damages that the other
party may suffer in the future.
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Prime’s Indemnification Clause
“To the fullest extent permitted by law,
CONTRACTOR shall indemnify and hold harmless
OWNER and its directors, agents and employees from
and against all claims, damages, losses, and expenses
including but not limited to attorneys’ fees arising out of
or resulting from the performance of the work by the
CONTRACTOR or its subcontractors, regardless of
whether or not it is caused in part by a party
indemnified hereunder.”
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Sub’s edits to Indemnity Clause

To the fullest extent permitted by law, CONTRACTOR shall indemnify and
hold harmless BUYER and its directors, agents and employees from and
against all claims, damages, losses, and expenses including but not limited to
attorneys’ fees arising out of or resulting from the grossly negligent acts or
omissions or willful misconduct of performance of the work by the
CONTRACTOR or its subcontractors, except to the extent such claims arise
directly out of the negligence or willful misconduct of the BUYER. regardless
of whether or not it is caused in part by a party indemnified hereunder. In no
event shall CONTRACTOR’s liability arising out of or in connection with
this Agreement exceed, in the aggregate, the total fees paid by OWNER
hereunder. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY SPECIAL, EXEMPLARY, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE OR OTHER INDIRECT DAMAGES OF
ANY KIND, EVEN IF SUCH PARTY HAS BEEN ADVISED IN ADVANCE
OF THE POSSIBILITY OF SUCH DAMAGES, OR SUCH DAMAGES
COULD HAVE REASONABLY FORESEEN BY SUCH PARTY.
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FAR 52.228-7 Insurance Liability
to Third Parties

Cost reimbursement contracts

If Contractor maintains required insurance, then Government
will reimburse Contractor for liabilities to third persons not
compensated by insurance.

Doesn’t matter if contractor negligent
But….

Government will only reimburse final judgments or
settlements

Subject to availability of appropriated funds

Excluded: willful misconduct or failure to carry required
insurance
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Flowing Down FAR 52.228-7 to Sub

Cannot flow down without government’s
consent

If flowed down without government’s
consent, effect is that prime is indemnifying
sub

One potential solution is to amend Disputes
clause to state that prime will sponsor sub’s
claims to the government
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Language for Disputes Clause
“Any dispute that arise this Subcontract which relates to a matter that gives the Prime
Contractor recourse against the Government under the prime contract or applicable law,
shall, at Prime’s election, be resolved as follows … Prime shall promptly notify
Subcontractor of any decision by the Contracting Officer on such claim. If said
decision is binding upon Prime under the prime contract or applicable law, it shall in
turn be binding upon Prime and Subcontractor with respect to such decision insofar as
it relates to this Subcontract. If Subcontractor is adversely affected by any such
decision made by the Contracting Officer, and if Prime elects not to appeal such
decision pursuant to the “Disputes” clause of the prime contract and applicable law,
Prime shall promptly notify Subcontractor. If Subcontractor thereafter timely requests
Prime to appeal such decision, Prime shall authorize Subcontractor to do so under the
name of Prime as the sponsor of Subcontractor’s appeal. Any decision upon such an
appeal, whether submitted by Prime or Subcontractor with Prime’s sponsorship, if
binding upon Prime under the prime contractor applicable law, shall in turn be binding
upon Prime and Subcontractor under this Subcontract with respect to such decision
insofar as it relates to this Subcontract.”
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Questions?