Pricing Insurance for Work on a Government Installation: FAR Rules
When preparing a bid for construction work on a federal base or federal property, carrying standard overhead insurance is not always enough. Solicitations requiring activity on federal property incorporate strict contractual insurance standards that must be verified before mobilizing crews. Understanding how 52.228-5 Insurance-Work on a Government Installation. | Acquisition.GOV operates alongside the baseline minimums outlined in 28.307-2 Liability. | Acquisition.GOV helps estimators avoid underpricing mandatory policy requirements during bid day checklist preparation.
The Installation Scenario: Reviewing the Prime Contract Terms
Consider a hypothetical interior trade subcontractor pricing framing, drywall, and acoustical ceilings on a federal military installation. In this scenario, the prime general contractor is bound by FAR clause 52.228-5, which flows down through the subcontract documents. Under paragraph (a) of the clause, the contractor must, at its own expense, provide and maintain during the entire performance of the contract at least the kinds and minimum amounts of insurance required in the Schedule or elsewhere in the contract.
Before any work begins under the contract, the contractor must notify the Contracting Officer in writing that the required insurance has been obtained. For subcontractors pricing their bids, this means policy limits and necessary endorsements cannot simply be assumed; they must match the prime contract's insurance obligations exactly.
Workers' Compensation and Employer's Liability Coverage
Under FAR 28.307-2(a), contractors must comply with applicable Federal and State workers' compensation and occupational disease statutes. The regulation establishes specific baseline rules for this category of coverage:
- If occupational diseases are not compensable under applicable statutes, they must be covered under the employer's liability section of the insurance policy, unless contract operations are so commingled with commercial operations that practical application is impossible.
- Employer's liability coverage of at least $100,000 is required, except in States with exclusive or monopolistic funds that do not permit workers' compensation to be written by private carriers.
- Contracts subject to the Defense Base Act require specific treatment referenced under FAR 28.305(c).
Subcontractors building their field costs should review whether their labor burden or general conditions cover these mandatory baseline limits, especially when calculating their true project expenses alongside labor burden rate components.
General Liability Requirements
General liability on a government installation is governed by FAR 28.307-2(b). The contracting officer must require bodily injury liability insurance coverage written on the comprehensive form of policy. The minimum threshold specified in the regulation is at least $500,000 per occurrence.
Regarding property damage, FAR 28.307-2(b)(2) specifies that property damage liability insurance is required only in special circumstances as determined by the agency. Estimators must check the solicitation Schedule to verify whether the agency has invoked special circumstances requiring property damage liability beyond the standard bodily injury minimum.
Automobile, Aircraft, and Vessel Liability
Transporting materials, hauling drywall carts, or driving company trucks onto a federal installation triggers vehicle coverage rules under FAR 28.307-2(c). The contracting officer must require automobile liability insurance written on the comprehensive form of policy covering the operation of all automobiles used in connection with performing the contract. For policies covering automobiles operated in the United States, coverage must be at least:
- $200,000 per person for bodily injury
- $500,000 per occurrence for bodily injury
- $20,000 per occurrence for property damage
The amount of liability coverage on other vehicle policies must be commensurate with any legal requirements of the locality and sufficient to meet normal and customary claims. If performance involves aircraft, FAR 28.307-2(d) mandates aircraft public and passenger liability insurance with minimums of at least $200,000 per person and $500,000 per occurrence for bodily injury (other than passenger liability), $200,000 per occurrence for property damage, and passenger liability bodily injury coverage of at least $200,000 multiplied by the number of seats or passengers, whichever is greater. When contract performance involves the use of vessels, FAR 28.307-2(e) directs the contracting officer to require vessel collision liability and protection and indemnity liability insurance as determined by the agency.
Mandatory Policy Endorsements and 30-Day Cancellation Rules
Obtaining basic coverage amounts is only part of the requirement. Under paragraph (b) of 52.228-5 Insurance-Work on a Government Installation. | Acquisition.GOV, the policies evidencing required insurance must contain a specific endorsement. This endorsement states that any cancellation or any material change adversely affecting the Government's interest shall not be effective until one of two periods has elapsed:
- For such period as the laws of the State in which the contract is to be performed prescribe; or
- Until 30 days after the insurer or the contractor gives written notice to the Contracting Officer, whichever period is longer.
Estimators should ensure their insurance broker is aware of this endorsement requirement during bidding, as policy terms must accommodate the 30-day notice or state law duration without gap.
Subcontractor Flow-Down and Recordkeeping
Paragraph (c) of FAR 52.228-5 establishes an explicit flow-down requirement. The prime contractor must insert the substance of the clause, including paragraph (c), in all subcontracts that require work on a Government installation. Furthermore, the prime contractor must require subcontractors to provide and maintain the insurance required in the Schedule or elsewhere in the contract.
The prime contractor must maintain a copy of all subcontractors' proofs of required insurance and make those copies available to the Contracting Officer upon request. Subcontractors bidding trade packages must be prepared to submit these formal proofs before setting foot on site.
Sources
52.228-5 Insurance-Work on a Government Installation. | Acquisition.GOV
28.307-2 Liability. | Acquisition.GOV
Published October 30, 2026. No affiliate links on this page. Facts come from the sources linked above; check them for updates.