Subpart 5228.3 - INSURANCE

Parent topic: Part 5228 - BONDS AND INSURANCE

5228.301 Policy.

(a)(1) DON policy is to rely upon the commercial insurance industry to the maximum extent

practicable to protect contractors against risks arising under contracts. However, it may be

preferable or necessary to provide Government indemnification--

(A) Where there is a continuing program, such as for nuclear vessels, and insurance premium costs

over a period of time could equal the amount of coverage;

(B) Where war risk is involved;

(C) Where the cost of insurance is so excessive it is unreasonable and constitutes a "turndown

quotation";

(D) Where the Government risk is rated only on its isolated experience and not shared with the risks

of others, whether or not the risk is unusually hazardous;

(E) Where an urgent requirement allows insufficient time to receive a competitive insurance

quotation;

(F) Where the degree of risk is either very small or catastrophic; or

(G) Where indemnification of the deductible portion of insurance coverage will substantially reduce

insurance costs.

(b) All matters concerning indemnification shall be referred to DASN(P) for decision or

recommendation sufficiently in advance of contract award.

5228.301-90 Authority to act.

DASN(P) is authorized to act by direction of the Secretary of the Navy, or as the duly authorized

representative of the HCA, the contracting officer, or any other Naval official designated in the

contract to:

(a) Require or approve contract insurance; and

(b) Execute, sign or endorse all lost policy releases; proofs of loss; subrogation agreements;

endorsements of policies for claims and/or return premiums; payment orders; and insurance drafts

made payable to SECNAV and not affecting the obligation of appropriations.

5228.301-91 Payment of claims to third parties.
The following procedure shall be used in making all payments under contracts in which the

Government assumes the risk of liability to third parties and such liability is not compensated for by

insurance or otherwise:

(a) If any suit or action is filed or any claim is made against the contractor pursuant to the clause at

FAR 52.228-7, Insurance--Liability to Third Persons, for loss of or damage to property, death or

bodily injury arising out of performance of a contract, the contracting officer, in consultation with

legal counsel, shall submit the following information via the HCA to DASN(P) for a determination as

to whether the Government has assumed liability for the claim and if so, the amount to be paid:

(1) statements of all pertinent facts;

(2) the contracting officer's recommendation as to the action to be taken with respect to the claim;

and

(3) the proposed payment amount.

(b) Unless DASN(P) advises otherwise within 30 calendar days after receipt of the information from

the contracting officer, the third party may be paid the proposed payment amount unless pursuant

to appeal by the contractor under the Disputes clause, a different amount is allowed.

(c) If DASN(P) determines that the Government did not assume liability, the contracting officer will

be notified and no payment shall be made, unless pursuant to appeal by the contractor under the

Disputes clause, a different decision is made.

5228.305 Overseas workers' compensation and war-hazard

insurance.

(d) Submit requests for waiver through DASN(P) by email at

usn.pentagon.asstsecnavrdadc.mbx.pabt@us.navy.mil with the subject “[Activity Name] PGI

288.305- Overseas Workers' Compensation and War-Hazard Insurance Waiver.”

5228.307 Insurance under cost-reimbursement contracts.

5228.307-1 Group insurance plans.

(a) Prior approval requirement. Group insurance plans under cost-reimbursement contracts for

which contract administration is retained by the DON shall be submitted for approval to the DON

contracting officer responsible for contract administration.

5228.307-90 Liability of subcontractors to third parties.

(a) In general, DON will not assume liability of subcontractors to third parties.
(b) Under cost-reimbursement contracts, contracting officers may, when in the best interest of

Government, provide for flow down of the clause at FAR 52.228-7, Insurance--Liability to Third

Persons, to cost-reimbursement subcontracts.