Guides
Insurance requirements for government contractors
Federal contract insurance and bond rules: FAR 28.307-2 minimums, FAR 52.228-5 and 52.228-7, Miller Act bonds under 40 U.S.C. 3131, and what to expect on a bid.
Federal contracts set insurance and bond requirements in three places: the Federal Acquisition Regulation (FAR), the specific clauses in your solicitation, and the contract schedule. FAR 28.307-2 gives the baseline minimums (for example, $500,000 per occurrence for general liability bodily injury and $100,000 for employer's liability), clause 52.228-5 applies when you work on a government installation, and the Miller Act (40 U.S.C. 3131) requires performance and payment bonds on federal construction contracts above $150,000.
Read the solicitation first. The contracting officer can require more than the FAR minimums, and state and agency-specific rules add to them. This guide is general information; the contract controls.
The FAR minimums: 28.307-2
FAR subpart 28.3 covers insurance. Section 28.307-2 lists the liability coverages the government wants contractors to carry, with these amounts (as published at acquisition.gov):
| Coverage | Minimum in FAR 28.307-2 |
|---|---|
| Workers' compensation | No dollar amount; comply with federal and state statutes |
| Employer's liability | At least $100,000 (not required in monopolistic-fund states where private carriers cannot write comp) |
| General liability, bodily injury | $500,000 per occurrence |
| General liability, property damage | No set amount; required in special circumstances the agency determines |
| Automobile liability, U.S. operations | $200,000 per person and $500,000 per occurrence for bodily injury; $20,000 per occurrence for property damage |
| Automobile liability, outside the U.S. | Local legal requirements, sufficient for normal claims |
| Aircraft | $200,000 per person / $500,000 per occurrence bodily injury (non-passenger); $200,000 property damage; passengers $200,000 times seats or passengers, whichever is greater |
| Vessels | Collision and protection and indemnity as the agency determines |
These are floors. Many agencies and prime contractors ask for higher limits, often by requiring an umbrella or excess layer. For how to review the insurance section of any contract, see how to review the insurance requirements in a contract.
The insurance clause, line by line
Federal regulations are public domain, so here is the text itself. FAR 28.310 requires clause 52.228-5 in fixed-price solicitations and contracts expected to exceed the simplified acquisition threshold that require work on a government installation, unless only a small amount of on-site work is involved (the FAR's example is a few brief visits per month) or all of it is outside the United States. Under FAR 28.306(b), when the clause is required, the coverage in 28.307 becomes the minimum, and the contracting officer may require more. The clause reads (Jan 1997 version, as published at acquisition.gov under FAC 2026-01):
(a) The Contractor shall, at its own expense, provide and maintain during the entire performance of this contract, at least the kinds and minimum amounts of insurance required in the Schedule or elsewhere in the contract.
"At its own expense" means no separate line item; price the premium into the bid. "Entire performance" means a renewal that lapses mid-contract is a breach. "In the Schedule or elsewhere" usually sends you to Section H (Special Contract Requirements) or an attachment for the actual limits, which are often higher than the FAR floors.
(b) Before commencing work under this contract, the Contractor shall notify the Contracting Officer in writing that the required insurance has been obtained. The policies evidencing required insurance shall contain an endorsement to the effect that any cancellation or any material change adversely affecting the Government's interest shall not be effective— (1) For such period as the laws of the State in which this contract is to be performed prescribe; or (2) Until 30 days after the insurer or the Contractor gives written notice to the Contracting Officer, whichever period is longer.
The first sentence is a notice from you, not a certificate from your broker, although a certificate usually goes with it. The second is the item that trips contractors: it asks for an endorsement on the policy, and since ACORD's 2009 revision a certificate cannot promise notice by itself. Ask your broker for a notice-of-cancellation endorsement scheduling the contracting officer. Endorsement wording varies by carrier, so read what is issued against the clause's "any cancellation or any material change."
(c) The Contractor shall insert the substance of this clause, including this paragraph (c), in subcontracts under this contract that require work on a Government installation and shall require subcontractors to provide and maintain the insurance required in the Schedule or elsewhere in the contract. The Contractor shall maintain a copy of all subcontractors' proofs of required insurance, and shall make copies available to the Contracting Officer upon request.
Flowdown is mandatory, and the subcontractor must carry the limits in the prime contract's Schedule, not lower limits you negotiate. Keep the subcontractor certificates and endorsements where you can produce them; see managing subcontractor insurance and certificates.
The 28.307-2 lines the clause points to
- (a) Workers' compensation and employer's liability. "Employer's liability coverage of at least $100,000 shall be required, except in States with exclusive or monopolistic funds that do not permit workers' compensation to be written by private carriers." Occupational disease not compensable under the statute must be covered under employer's liability. In a monopolistic state, the gap is usually filled with stop-gap coverage (Monopolistic state funds: workers' comp in ND, OH, WA and WY).
- (b) General liability. "The contracting officer shall require bodily injury liability insurance coverage written on the comprehensive form of policy of at least $500,000 per occurrence." The comprehensive general liability form was replaced by the commercial general liability form in the 1980s; the CGL is what carriers issue today. Property damage liability is required "only in special circumstances as determined by the agency."
- (c) Automobile liability. Coverage for "the operation of all automobiles used in connection with performing the contract," at least "$200,000 per person and $500,000 per occurrence for bodily injury and $20,000 per occurrence for property damage" for U.S. operations. A combined single limit of $1 million meets these split limits.
Other standard clauses
FAR 52.228-7: liability to third persons
Clause 52.228-7 (Mar 1996), used in cost-reimbursement contracts and prescribed at FAR 28.311-1, requires workers' compensation, employer's liability, comprehensive general liability (bodily injury) and automobile liability (bodily injury and property damage) insurance, plus anything else the contracting officer requires. The contracting officer sets or approves forms, amounts, periods and insurers, and self-insurance needs approval.
What makes it distinctive is reimbursement. The government reimburses the reasonable cost of required insurance allocable to the contract and certain third-party liabilities not covered by insurance, if they arise from contract performance and are settled or adjudicated with written government approval. It does not reimburse liabilities caused by failing to carry required insurance, liabilities covered by other contract clauses, or those resulting from willful misconduct or lack of good faith by managers or supervisors of all or substantially all of the business, a plant or a major operation. Government liability is subject to the availability of appropriated funds. Report uninsured or underinsured claims to the contracting officer immediately.
FAR 52.228-3: Defense Base Act
For contracts performed overseas for certain agencies, clause 52.228-3 requires the contractor to provide Defense Base Act workers' compensation, either by insurance or by qualifying as a self-insurer under the Longshore and Harbor Workers' Compensation Act as extended by the DBA. It also sets injury reporting duties (Form LS-202 within ten days) and flows to covered subcontracts. This coverage is not standard state comp, so involve a broker experienced in DBA placements.
Group insurance plans: FAR 28.307-1
On cost-reimbursement contracts, a contractor must submit a group insurance plan for approval before buying it, and the plan must provide for the government to share in premium refunds or credits.
Bonds on federal construction: the Miller Act
For construction, alteration or repair of a federal public building or public work, 40 U.S.C. 3131 (the Miller Act) requires:
- A performance bond, protecting the government, in an amount the contracting officer considers adequate.
- A payment bond, protecting those who supply labor and material, generally equal to the contract amount and never less than the performance bond.
The threshold was historically $100,000 in the statute; FAR 28.102-1 (revised March 13, 2026) applies the requirement to construction contracts exceeding $150,000, and a 2022 law exempted it from further inflation indexing. For contracts above $35,000 and up to $150,000, the contracting officer selects at least two payment protections from a payment bond, an irrevocable letter of credit, a tripartite escrow agreement, certificates of deposit or deposited security, and the contractor furnishes one. Bonds or alternatives must be in place before the notice to proceed. Contracting officers can waive bonds for work in foreign countries when they are impracticable.
Bid guarantees are separate. FAR 28.101-2 sets a bid guarantee at not less than 20% of the bid price and not more than $3 million. The surety must be on Treasury's Circular 570 list (updated August 1, 2026), and under 31 CFR 223.10 a single risk is limited to 10% of the surety's paid-up capital and surplus.
Subcontractor and supplier rights
Under 40 U.S.C. 3133, a supplier or laborer who is not paid within 90 days after last work may sue on the payment bond; a claimant with only a subcontractor contract must give the prime written notice within 90 days; and suit must be filed within one year after the last labor or material, in the U.S. district court where the contract was performed. Those deadlines are short, so subcontractors should calendar them.
For how bonds work and how they differ from insurance, see surety bonds explained: how they differ from insurance, bid, performance and payment bonds: how contract surety works and what a surety bond costs and how it is priced. Capacity depends on financials; see bonding capacity and the surety bond cost calculator.
Hypothetical checklist for a $2 million federal renovation bid
A 25-employee general contractor bids on a $2 million repair job at a federal building. Before bid day:
- Request bid, performance and payment bond quotes from a surety; confirm it is on the Circular 570 list and that your bonding capacity covers the work.
- Read the solicitation for insurance clauses (expect 52.228-5 since the work is on a government installation) and any higher limits.
- Ask your broker to confirm limits exceed the FAR 28.307-2 floors, and whether an umbrella is needed.
- Arrange the cancellation endorsement naming the contracting officer.
- Collect certificates, additional insured endorsements (see additional insured endorsements explained) and waivers from every subcontractor, and flow the clauses down (managing subcontractor insurance and certificates).
- Provide written notice of insurance before starting work.
Key takeaways
- FAR 28.307-2 sets baseline liability minimums, but the solicitation and agency rules can raise them.
- Clause 52.228-5 requires advance written notice of coverage and a cancellation endorsement giving the contracting officer notice, and it must flow down.
- The Miller Act (40 U.S.C. 3131) requires performance and payment bonds on federal construction above $150,000, with alternatives from $35,000 to $150,000.
- Subcontractors have 90 days and one year deadlines under 40 U.S.C. 3133.
- Check the contract: state law, agency supplements and manuscript requirements all apply.
Sources: FAR 28.307-2; FAR 52.228-5; FAR 52.228-7; FAR 52.228-3; FAR 28.102-1; 40 U.S.C. 3131; 40 U.S.C. 3133.