No, as a general rule DBA insurance is not optional. United States federal law requires that DBA insurance be purchased for certain situations, including those in which U.S. or foreign-based employers contract with the U.S. Government (USG) to perform certain USG projects or services outside the continental U.S., including public work contracts involving construction and services provided in connection with the national defense or war activities outside the U.S. DBA insurance is also required when such employers contract to perform certain projects on U.S. military bases outside the U.S. Failure to obtain DBA insurance can result in stiff penalties.

DBA insurance provides for short- and long-term disability benefits and medical benefits to covered employees who are injured or killed in the course of their employment. The coverage also provides death benefits for their eligible survivors. According to the U.S. Department of Labor, permanent total disability and death benefits may be payable for life, and are subject to annual cost of living adjustments.

Like domestic U.S. workers’ compensation insurance rates, DBA insurance rates are either computed per $100 of payroll or with a minimum premium established, meaning the premium base for DBA insurance is computed per $100 of covered employee remuneration, subject to a minimum premium level. Additionally, policies are calculated using remuneration as the basis. "Remuneration," sometimes referred to as "pay-roll," means the entire payment for services rendered by the covered employee, whether paid in money or some substitute for money. For purposes of computing premiums, remuneration includes regular pay (i.e., salary or hourly), commissions, and bonuses.

The minimum premiums for DBA insurance are generally determined by the carrier to cover significant upfront and administrative costs, including without limitation contract administration, underwriting, claims handling, reinsurance, accounting, etc.

DBA insurance coverage may seem costly because DBA insurance losses often apply on a much broader basis than standard domestic workers’ compensation insurance losses. Several insurance professionals see DBA insurance as one of the most comprehensive workers’ compensation benefit programs in the U.S. For example unlike typical workers’ compensation coverage, DBA insurance covers employees who typically work more than five days a week and more than eight hours per day, and employees who work under dangerous conditions. Additionally, courts rely on two legal doctrines when making determinations regarding DBA insurance, the "Zone of Special Danger Doctrine" and the "Reasonable Recreation Doctrine." (Please visit http://www.dol.gov/owcp/dlhwc/lspm/lspm0-200.htm for more information on these doctrines.) Section 6. b. (2) and (3)

Compensation amounts for disability are fixed by law; for example, compensation for total disability is two-thirds of the employee’s average weekly earnings, subject in any event to a specified maximum weekly cap. Death benefits, also set by law, are paid based on the number of eligible dependents, again subject to a specified maximum weekly cap.

Yes, the U.S. Department of Labor oversees all DBA claims. Initial losses from Iraq are reported to the New York Department of Labor and Office of Workers’ Compensation for oversight and adjudication. The hearing process includes informal and formal conferences and input from a Benefits Review Board and the Federal Court system.

Yes, DBA insurance is available in the U.S. insurance market for contractors of all sizes, including small subcontractors, and is generally placed through insurance brokers or agents specializing in international property and casualty insurance. While a number of U.S. insurance carriers provide DBA insurance, some employers can exercise their right to become qualified self-insurers through the Department of Labor, and can thus cover their own losses.