DBA Law & Penalties

The Consequences for Contractors & Employers

Not Carrying DBA insurance coverage:

The corporation and its president, secretary and treasurer are severally liable for a fine of $11,000 and imprisonment for not more than one year. They are also severally jointly liable for the benefits during the period it fails to secure DBA insurance.

Failure to obtain DBA insurance carries stiff penalties. All government contracts contain a provision that requires bidding contractors to obtain necessary insurance. Failure to do so will result in fines and possible loss of contract.

  • The Employer is in violation of the law if it is:
  • Uninsured
  • Insured by an unauthorized carrier
  • Insured by an authorized carrier, but have no DBA endorsement
  • Operating under a waiver which is not effective

The additional and most severe penalty is that employers without DBA insurance coverage are subject to suits under common law, wherein common law defenses are waived. In other words, the claimants or their heirs need only file suit and do not have to prove negligence. Lastly, all claims may be brought in Federal Court and are against the insured directly.

Ultimately, the Employer is responsible for all liability imposed under the Act, not;

  • The broker or agent
  • The government contracting officer
  • The insurance company
  • The attorney
  • The Department of Labor

The Prime Contractor is also liable for benefits due if its subcontractors and subordinate contractors are uninsured.

To find out when DBA insurance coverage needs to be in place click here.

To learn more about the employer’s responsibility with DBA insurance click here.

To learn about the Defense Base Act Law and the related laws that impact DBA insurance requirements click here.