This series of FAR summaries is meant to take a meaningful portion of the Federal Acquisition Regulations to ensure an easy-to-understand approach to maintain that readers comprehend the process of doing business with the government and that the government exercises a fair and reasonable approach to doing business with the general public.
FAR 28.307-2(b) vs. FAR 28.307-2(a)
This part provides assurance that the government protects itself but generally does business with protected companies. It discusses usage of performance and payment bonds to ensure construction companies can do the job and has money. It draws out various insurance policies. The government is a trusted business partner who is not liable for the mishaps, mistakes and false advertising of those who think the government to be a company’s savior. It can be, but the company need be fiscally sound and business savvy to enter into an agreement with the government.
Insurance is part of such common sense. It protects all involved parties. Not just the government.
General Liability (GL) vs Professional Liability (PL)
GL is included in most company policies. All that I’ve seen. It covers happenings on the property which harm employees or patrons outside harm caused by professional practice. The government requires that a policy for GL to be at least $500k.
PL is in my experience similar to Employer’s Liability (EL) but not Worker’s Compensation (WC). It covers harm caused on the job by those doing the job. Whereas WC covers harm caused by a professional act that harms only the professional doing the job. Limits of each occurrence and aggregate vary in accordance with each profession as well as applicable law(s).
An example of GL may be when a Maintenance Engineer is mowing a piece of grass on the property owned by the insured and a sharp object is flung from the lawnmower and pierces the eye of a business patron or somebody else on the property of the business. In this case GL would cover any damages caused by the accident because it was not directly related to the professional act(s) of the company but due to upkeep of the company’s property.
An example of PL may be routinely noticed in hospitals. Whereas a doctor makes a common or uncommon mistake during a medical procedure. This example is commonly used because it is a happening of a professional harming a patron during a professional act in which the patron was present at the company location to specifically receive an act made by a certified professional that caused harm to the patron at the hands of the professional or at the direction or misjudgment of the professional.
GL and PL are not interchangeable. They are separate policies with separate limits because they cover separate types of instances.
The solicitation solicited by the Contracting Officer will be very clear as to what type(s) of insurance are required for the project. Be sure to converse with your preparer because the CO will talk to both you and your preparer to tie up any loose ends.
Don’t just send your entire insurance binder over and assume your CO will cherry-pick the correct policy or policies for you. It is best to submit a certificate showing the specified requirements.
Insurance is usually an annual requirement. So, make sure you have current insurance and update it yearly as it expires.
I worked with insurance policies in services contracting. Common errors include shared policies, lower limits than specified and outdated policies. I’ve also seen many a company’s entire policy binders as well as forged certificates. COs know what they need. Your preparer may not. Be sure that the advice of the government is followed and use your preparer to provide such. Many insurance preparers may not be familiar with expectations on a federal project. Make sure you know what your CO needs and do not make them hunt for it. Be aware that it can take months to obtain a policy and revisions by your preparer take time as well.
One may wonder why “b” comes before “a” in this write-up. That’s because GL is routinely towards the top of the insurance certificate and PL is usually towards the bottom. I just am trying to help keep things in sync with the actual contract deliverables in this instance as insurance policies can be very complex. Especially, if the government states one thing and your preparer suggests another.
If you think I can help you then email nicholas.s.robertson@outlook.com for your introductory email and free consultation.
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