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Ordinarily, it is the policy of the Government not to insure its own risks. In the absence of specific statutory authority for the payment of insurance premiums, appropriated moneys of the United States generally are not regarded as available for that purpose. There are, however, exceptions to these two statements. Insurance will be required where it is mandatory by law, and may be required in the absence of any statutory prohibition when in the best interest of the Government. Examples of situations which may warrant obtaining insurance are: (a) where it is considered desirable to utilize the facilities and services of the insurance industry (e.g., safety protection and claim services); (b) where, in special instances, it is deemed necessary or desirable in connection with the performance of a contract (e.g., transportation of particularly valuable items), or (c) where commingling of property or the conditions of the contract make the carrying of insurance reasonably necessary for the protection of the several interests concerned.

§ 1-10.302 Notice of cancellation or change.

Where insurance is required by contract provision or in writing by the approving authority, the policies evidencing such insurance shall contain

an endorsement to the effect that cancellation or material change in the policies, adversely affecting the interest of the Government in such insurance, shall not be effective unless the written notice as required by the approving authority is given.

§ 1-10.303 Responsibility for loss of or damage to Government property.

Where Government property may be in the possession of or under the control of the contractor, or in the custody of a transportation company, the contract shall set forth the responsibility of the contractor for loss of or damage to such Government property. § 1-10.304 Insurance against loss of or damage to Government property.

In instances where insurance is required or approved to cover loss of or damage to Government property, such insurance may be provided either by specific insurance policies, or by inclusion of such risks in the contractor's existing insurance policies. When appropriate the insurance policies shall make formal disclosure of the Government's interest in the property.

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cial circumstances include the following:

(a) The contractor is engaged principally in Government work.

(b) The contractor has a segregated operation which is engaged principally in Government work.

(c) Government-furnished property is involved.

(d) The work required by the contract is performed within a Government establishment.

(e) The Government may desire to assume risks for which the contractor ordinarily obtains commercial insur

ance.

§ 1-10.402 Workmen's compensation in

surance overseas.

(a) The Defense Base Act, as amended (42 U.S.C. 1651 et seq.), extends the application of the Longshoremen's and Harbor Workers' Compensation Act (33 U.S.C. 901 et seq.) to various classes of employees engaged in work outside the United States, including any employee engaged: (1) In the performance of a public work contract or; (2) in the performance of any contract approved or financed pursuant to the Foreign Assistance Act of 1961 (P.L. 87-195) other than: (i) contracts approved or financed by the Development Loan Fund except where the Secretary of Labor, acting upon the recommendation of any department or agency of the United States, determines that such contracts should be covered, or (ii) contracts exclusively for the furnishing of materials or supplies. As used in this paragraph, a "public work" contract includes any contract for a fixed improvement or any project, whether or not fixed, involving construction, alteration, removal, or repair for the public use of the United States or its allies, including projects or operations under service contracts and projects in connection with the national defense or with war activities, dredging, harbor improvements, dams, roadways, and housing, as well as preparatory and ancillary work in connection therewith at the site or on the project. The following clause shall be included in all contracts subject to the Defense Base Act unless applicability of that Act has been waived by the Secretary of

Labor as provided in paragraph (b) of this § 1-10.402:

WORKMEN'S COMPENSATION INSURANCE
(DEFENSE BASE ACT)

The Contractor before commencing performance under this contract shall provide and thereafter maintain such Workmen's Compensation Insurance or security as is required by the Defense Base Act, as amended (42 U.S.C. 1651 et seq.). The Contractor further agrees to insert in all subcontracts hereunder to which the Defense Base Act is applicable, a clause similar to this clause, including this sentence, imposing on all such subcontractors a like requirement to comply with the Defense Base Act.

(b) Upon the recommendation of the head of the agency concerned, the Secretary of Labor may waive the applicability of the Defense Base Act with respect to any contract, subcontract, or subordinate contract, work location, or classification of employees.

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tions where all occupational diseases are not compensable under applicable law, insurance for occupational diseases will be required under the employers' liability section of the insurance policy; however, such additional insurance will not be required where contract operations are commingled with the contractor's commercial operations so that it would be impracticable to require such coverage. The clause set forth in § 1-10.402 shall be included in all contracts subject to the Defense Base Act unless applicability of that Act has been waived by the Secretary of Labor as provided in § 110.402(b).

§ 1-10.502-2 General liability insurance. (a) Bodily injury liability insurance will be required on the comprehensive form of policy.

(b) Property damage liability insurance will be required only in special circumstances as determined by the agency concerned. Property damage liability insurance may be approved when the nature of the contract operations warrant its purchase or where such operations are not separable from the contractor's commercial operations.

§ 1-10.502-3 Automobile liability insur

ance.

Automobile liability insurance will be required on the comprehensive form of policy and will provide for bodily injury and property damage liability covering the operation of all automobiles used in connection with the performance of the contract.

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Qualified programs of self-insurance covering any kind of risk may be approved where an examination of the program indicates that its application to the cost-reimbursement type contract is in the best interest of the Government. However, in any jurisdiction where workmen's compensation does not completely cover employers' liability to employees, a program of self-insurance for workmen's compensation may be approved only if

(a) The contractor also maintains an approved program of self-insurance for any employers' liability which is not so covered; or

(b) The contractor shows that the combined cost to the Government of self-insurance for workmen's compensation and commercial insurance for employers' liability will not exceed the costs of covering both kinds of risks by commercial insurance.

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FINDING AIDS

A list of CFR titles, subtitles, chapters, subchapters and parts and an alphabetical list of agencies publishing in the CFR are included in the CFR Index and Finding Aids volume to the Code of Federal Regulations which is published separately and revised semiannually (January 1 and July 1).

Table of CFR Titles and Chapters

Alphabetical List of Agencies Appearing in the CFR

List of CFR Sections Affected

80-130 0-81--40

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