252.217-7012 Liability and Insurance.

As prescribed in 217.7104 (a), use the following clause:

LIABILITY AND INSURANCE (AUG 2003)

(a) The Contractor shall exercise its best efforts to prevent accidents, injury, or damage to all

employees, persons, and property, in and about the work, and to the vessel or part of the vessel

upon which work is done.

(b) Loss or damage to the vessel, materials, or equipment.

(1) Unless otherwise directed or approved in writing by the Contracting Officer, the Contractor shall

not carry insurance against any form of loss or damage to the vessel(s) or to the materials or

equipment to which the Government has title or which have been furnished by the Government for

installation by the Contractor. The Government assumes the risks of loss of and damage to that

property.

(2) The Government does not assume any risk with respect to loss or damage compensated for by

insurance or otherwise or resulting from risks with respect to which the Contractor has failed to

maintain insurance, if available, as required or approved by the Contracting Officer.

(3) The Government does not assume risk of and will not pay for any costs of the following:

(i) Inspection, repair, replacement, or renewal of any defects in the vessel(s) or material and

equipment due to—

(A) Defective workmanship performed by the Contractor or its subcontractors;

(B) Defective materials or equipment furnished by the Contractor or its subcontracts; or

(C) Workmanship, materials, or equipment which do not conform to the requirements of the

contract, whether or not the defect is latent or whether or not the nonconformance is the result of

negligence.

(ii) Loss, damage, liability, or expense caused by, resulting from, or incurred as a consequence of

any delay or disruption, willful misconduct or lack of good faith by the Contractor or any of its

representatives that have supervision or direction of—

(A) All or substantially all of the Contractor's business; or

(B) All or substantially all of the Contractor's operation at any one plant.

(4) As to any risk that is assumed by the Government, the Government shall be subrogated to any

claim, demand or cause of action against third parties that exists in favor of the Contractor. If

required by the Contracting Officer, the Contractor shall execute a formal assignment or transfer of

the claim, demand, or cause of action.

(5) No party other than the Contractor shall have any right to proceed directly against the

Government or join the Government as a co-defendant in any action.

(6) Notwithstanding the foregoing, the Contractor shall bear the first $50,000 of loss or damage
from each occurrence or incident, the risk of which the Government would have assumed under the

provisions of this paragraph (b).

(c) Indemnification. The Contractor indemnifies the Government and the vessel and its owners

against all claims, demands, or causes of action to which the Government, the vessel or its owner(s)

might be subject as a result of damage or injury (including death) to the property or person of

anyone other than the Government or its employees, or the vessel or its owner, arising in whole or in

part from the negligence or other wrongful act of the Contractor or its agents or employees, or any

subcontractor, or its agents or employees.

(1) The Contractor's obligation to indemnify under this paragraph shall not exceed the sum of

$300,000 as a consequence of any single occurrence with respect to any one vessel.

(2) The indemnity includes, without limitation, suits, actions, claims, costs, or demands of any kind,

resulting from death, personal injury, or property damage occurring during the period of

performance of work on the vessel or within 90 days after redelivery of the vessel. For any claim,

etc., made after 90 days, the rights of the parties shall be as determined by other provisions of this

agreement and by law. The indemnity does apply to death occurring after 90 days where the injury

was received during the period covered by the indemnity.

(d) Insurance.

(1) The Contractor shall, at its own expense, obtain and maintain the following insurance—

(i) Casualty, accident, and liability insurance, as approved by the Contracting Officer, insuring the

performance of its obligations under paragraph (c) of this clause.

(ii) Workers Compensation Insurance (or its equivalent) covering the employees engaged on the

work.

(2) The Contractor shall ensure that all subcontractors engaged on the work obtain and maintain the

insurance required in paragraph (d)(1) of this clause.

(3) Upon request of the Contracting Officer, the Contractor shall provide evidence of the insurance

required by paragraph (d) of this clause.

(e) The Contractor shall not make any allowance in the job order price for the inclusion of any

premium expense or charge for any reserve made on account of self-insurance for coverage against

any risk assumed by the Government under this clause.

(f) The Contractor shall give the Contracting Officer written notice as soon as practicable after the

occurrence of a loss or damage for which the Government has assumed the risk.

(1) The notice shall contain full details of the loss or damage.

(2) If a claim or suit is later filed against the Contractor as a result of the event, the Contractor shall

immediately deliver to the Government every demand, notice, summons, or other process received

by the Contractor or its employees or representatives.

(3) The Contractor shall cooperate with the Government and, upon request, shall assist in effecting

settlements, securing and giving evidence, obtaining the attendance of witnesses, and in the conduct

of suits. The Government shall reimburse the Contractor for expenses incurred in this effort, other

than the cost of maintaining the Contractor's usual organization.
(4) The Contractor shall not, except at its own expense, voluntarily make any payment, assume any

obligation, or incur any expense other than what would be imperative for the protection of the

vessel(s) at the time of the event.

(g) In the event or loss of or damage to any vessel(s), material, or equipment which may result in a

claim against the Government under the insurance provisions of this contract, the Contractor shall

promptly notify the Contracting Officer of the loss or damage. The Contracting Officer may, without

prejudice to any other right of the Government, either—

(1) Order the Contractor to proceed with replacement or repair, in which event the Contractor shall

effect the replacement or repair;

(i) The Contractor shall submit to the Contracting Officer a request for reimbursement of the cost of

the replacement or repair together with whatever supporting documentation the Contracting Officer

may reasonably require, and shall identify the request as being submitted under the Insurance

clause of the agreement.

(ii) If the Government determines that the risk of the loss or damage is within the scope of the risks

assumed by the Government under this clause, the Government will reimburse the Contractor for

the reasonable, allowable cost of the replacement or repair, plus a reasonable profit (if the work or

replacement or repair was performed by the Contractor) less the deductible amount specified in

paragraph (b) of this clause.

(iii) Payments by the Government to the Contractor under this clause are outside the scope of and

shall not affect the pricing structure of the contract, and are additional to the compensation

otherwise payable to the Contractor under this contract; or

(2) In the event the Contracting Officer decides that the loss or damage shall not be replaced or

repaired, the Contracting Officer shall—

(i) Modify the contract appropriately, consistent with the reduced requirements reflected by the

unreplaced or unrepaired loss or damage; or

(ii) Terminate the repair of any part or all of the vessel(s) under the Termination for Convenience of

the Government clause of this agreement.

(End of clause)

Parent topic: 252.217 RESERVED