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Why Does a Government Contractor Need an Insurance Advisor?

Government contracting businesses tend to have more operational complexities than companies in other sectors, for a variety of reasons. If you do business internationally or have employees based outside the US, you’ll face unique risks and will need to meet insurance requirements that vary by country. For example, some countries in Asia require you to work with a local broker that has admitted paper in the region, while others expect you to secure a large bond before you can do business there. The particular government agency you work with, the contract vehicle you work under, whether you’re a prime vs subcontractor, and the nature of your work also impact your exposures and your insurance obligations.

GovCon Employee

These realities can create unique or unforeseen exposures that raise your risk, and they can introduce insurance obligations that are complicated and potentially costly. That’s where an independent insurance advisor can make a significant difference. An insurance advisor is an independent firm that focuses on understanding your business, identifying your risks, and finding the best coverage to protect your assets and meet your contractual obligations. An independent insurance advisor has access to the broad insurance market, so they can identify and evaluate the most appropriate offerings, then structure and negotiate the best solution, often putting together a package of coverages to avoid gaps.

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What Should a Government Contractor Look for in an Insurance Advisor?

Several factors should weigh in when you’re choosing an independent insurance advisor to address the risks your government contracting business faces. 

The structure and ownership of the firm is an important consideration. Advisors backed by private equity groups or other financial sponsors tend to focus more on achieving aggressive financial goals and cutting expenses vs delivering the highest quality service and investing in the resources to accomplish that goal. In contrast, a privately owned insurance advisor has the control and latitude to focus on their clients’ best interests and the incentive to invest in the people, technology, and other resources to maintain a high level of service quality. 

Next, look for an advisor that has a team of highly experienced professionals with a long tenure with the company and deep knowledge of commercial insurance. Find out which team members you’ll work with ongoing (beyond the initial sales pitch), to ensure you’ll get the full benefit from the firm’s expertise. 

Finally, look for an independent insurance advisor with deep experience working with government contracting businesses. It’s vital that your advisor understands the complexities of insuring a company that does business with the government and has a proven track record of serving these companies successfully.

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B. F. Saul Insurance understands the nuances and complexities of protecting your company from the risks that arise when doing business with the government. 

Why Is it Important to Choose an Advisor That Specializes in the Govcon Sector?
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An advisor that regularly works with government contracting businesses understands the nuances of working with the government and how they impact your exposure and your insurance needs.

For instance, insurance advisors who specialize in this sector have intimate knowledge of issues like how operating OCONUS raises your risk and why you shouldn’t assume meeting FAR (Federal Acquisition Regulation) requirements is sufficient to protect your assets. Because they’ve worked with government contractors across a wide variety of fields, doing business in many different countries, they’ve handled a large number of scenarios unique to this sector. They also know how to obtain the information they need to assess your risk and find the most appropriate solutions, without requiring you to disclose confidential information.

For reasons like these, an independent advisor with deep experience in the government contracting sector is best suited to understand your exposures and help protect your assets with the optimal insurance solutions. They won’t waste time getting up to speed on how government contracting works, and they won’t overlook the less obvious insurance needs of a govcon business. 

What Should Our Govcon Company Expect When Working with an Insurance Advisor?

At a minimum, your insurance advisor should engage in proactive planning and provide clear, frequent communication to avoid unpleasant surprises. For example, your advisor should meet with you regularly to keep tabs on how your business is evolving and help you understand how those changes could impact your risk and your insurance requirements.

Your insurance advisor should also provide additional services specific to government contracting businesses. For instance, B. F. Saul Insurance helps govcon clients forecast their insurance needs before they finalize a government contract bid, so they can factor in those costs with confidence. That’s especially important if your business scales up and down significantly in response to contract awards. By providing precise forecasts—or even hard quotes from an insurer if needed—the advisor can help you prepare to meet future insurance obligations and budget for those costs. 

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Once the contract is awarded, an insurance advisor can move quickly to get coverage in place and obtain a certificate of insurance. For example, when a health staffing company bid on a contract to staff positions for VA locations across the country, B. F. Saul Insurance helped them budget for the insurance requirements as they evolved throughout the ramp-up period. For govcon businesses working on an IDIQ (indefinite delivery, indefinite quantity) contract, an independent advisor can help forecast how much insurance you’ll need as task orders come in and budget accordingly.

An independent insurance advisor that specializes in the govcon sector will also provide loss control recommendations specific to your business. For example, some contractors don’t realize that overseas employees are no longer covered by a US workers’ compensation policy as soon as the aircraft’s wheels go up. Shutting down the domestic payroll at that point—and coordinating seamlessly with Defense Base Act (DBA) coverage—avoids the dilemma of overpaying for coverage once employees are OCUNUS. There are similar complexities associated with dockworkers, longshoremen, and those who work on international waterways and aircraft carriers. These are just some of the many ways an insurance advisor with govcon-specific experience can help contracting businesses reduce risk and protect assets.

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Discover the trends driving change in the US business insurance market and what it means for your govcon company.

What Insurance Coverages Are Most Important for Government Contractors?

While every business has unique insurance needs, several types of coverage tend to be most critical for government contracting companies. These include:

  • DBA, which is equivalent to workers’ compensation insurance for govcon employees who work OCONUS
  • Contractor’s all-risk, which is similar to a builder’s risk policy, but without the typical exclusion for acts of war, for example 
  • War risk insurance to protect against losses from incidents like invasions, riots, military coups, and acts of terrorism, for example
  • US Longshore and Harbor Workers (USL-H) insurance to cover employees who work on or over navigable waters in or adjacent to the US
  • Foreign general liability (GL) to protect against events that occur outside US borders
  • Coverage for third-country nationals, local nationals, and expatriates, which can be challenging to obtain
  • Medical malpractice insurance, which is essential for government contractors that provide healthcare services
  • Third-party crime coverage that protects your business in the event an employee steals from your government client
  • Business travel accident (including out-of-country medical), which is an affordable way to fill gaps left by DBA insurance, including evacuation assistance, repatriation of remains, and a defined death benefit  
  • Kidnap and ransom, including coverage for the increasingly common incident of express kidnapping (abducting an employee for the purpose of draining their bank account, then setting them free)
  • Employment practices liability, a growing exposure for contractors with employees spread across various government sites
  • Pollution coverage, an often-overlooked risk that can extend to the accidental release of materials that aren’t considered unsafe, but need to be captured and disposed
  • Cyber liability, which is vital for any government contracting business but especially those that handle or store PII (personally identifiable information)    
Are There Common Pitfalls When Buying Insurance for a Government Contractor?

One of the most common problems occurs when a government contractor agrees to perform services that aren’t included in the statement of work (SOW) the insurance policy is based on. For example, a business contracted to provide IT services at a government site might be asked to do minor maintenance work in the data center. If the insurance carrier is unaware the business is performing these services, or the work involves a different level of risk, the insurer is likely to deny any associated claims. 

Another typical pitfall is failing to consider the insurance implications of establishing a joint venture to compete for a contract. Often each party assumes they’re covered adequately under their existing insurance policies, but most carriers expressly exclude such ventures. An independent broker can avoid coverage gaps by talking with you regularly, understanding what plans you have on the horizon, and discussing the insurance implications with the carrier ahead of the contract award. 

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Questions about insurance for government contractors? We've seen them all.

How Can an Insurance Advisor Help our Govcon Company with Claims?

No one wants to think about experiencing a loss that requires a claim. However, a skilled insurance advisor can recommend ways to prevent losses and the associated claims and help you achieve an optimal outcome if a covered claim occurs.

An advisor will work closely with you during the bidding stage to identify the types of claims the contract could involve and how to protect against them. Your advisor can also walk you through the government immunity checklist, point out gaps, and recommend appropriate steps to fill them. If you use subcontractors, your broker will review those contracts, identify exposures, and recommend contract changes that shift risk where appropriate. 

If your govcon business experiences a loss that triggers a claim, an experienced insurance advisor will go beyond handling the administrative tasks and serve as an advocate to help you achieve the best feasible claim outcome. Some independent brokers employ an in-house attorney on their claims staff for this very purpose. These professionals understand how to navigate complex claims, maintain strong relationships with insurers that serve the govcon sector, and are skilled in negotiating with these carriers and advocating for your rights. Their claims advocacy efforts can mitigate your risk and reduce your claims costs.

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Why is B. F. Saul Insurance the Right Advisor for Government Contracting Businesses?

The commercial insurance professionals at B. F. Saul have extensive experience working with government contractors across many different fields. We understand the nuances and complexities of protecting your business from the risks that arise when doing business with the government. 

The B. F. Saul team establishes a true partnership with your staff and gets to know your government contracting business intimately, so we can help protect your valued assets from risk. We also leverage decades-long relationships with leading companies that provide insurance essential to a government contracting business, working closely with their underwriting and claims staffs. Those relationships streamline the process by avoiding the need to go through a managing general agent (MGA) or other resource to secure all the protection you need. 

B. F. Saul Insurance

If your government contracting business experiences a loss, our concierge-level claims service helps maximize the dollar amount you recover and minimizes your staff’s time commitment. The B. F. Saul team includes a former practicing insurance attorney who knows how to work with an insurer’s senior claims professionals, advocate on your behalf, and negotiate the best outcome if a loss occurs. 

As a privately owned firm, B. F. Saul Insurance also brings an objective perspective and the financial means to invest in the resources it takes to provide your government contracting businesses with the superior service you expect and deserve.

Schedule a call with a knowledgeable, experienced advisor to learn how B. F. Saul insurance can help protect your government contracting business from risk.