Government Contracting & Insurance

Government contracts create real opportunity — but they also come with strict insurance, documentation, and compliance requirements.

This page is intended for businesses preparing to compete responsibly in the government contracting space.

Insurance is often required before work begins, and requirements may change depending on contract scope, agency language, and performance expectations.

Why Insurance Matters in Government Contracting

Contracting agencies often require proof of insurance before work can begin. Coverage must be maintained throughout the contract term, and certificates may need to be updated quickly when scope, limits, or contract language changes.

Getting this wrong can lead to delays, compliance issues, or contract complications. Getting it right helps you stay eligible, credible, and ready for the next opportunity.

Common Insurance Requirements

Requirements vary by agency and contract, but many government contracts require a combination of:

  • Errors & Omissions (E&O) — for claims tied to professional services, advice, or failure to perform as outlined.
  • General Liability / Business Owners Policy (BOP) — for everyday operational risks, third-party injury, and property damage.
  • Workers’ Compensation — may be required depending on contract type, number of employees, and applicable state laws, even for small teams or subcontracted work.
  • Cyber Liability — increasingly required when handling data, accessing systems, or storing sensitive information.
  • Commercial Auto — required when vehicles are used in contract performance, including transporting equipment, materials, or personnel.
  • Certificates of Insurance (COIs) — often with specific wording, limits, or additional insured requirements.

Even when a coverage type is not explicitly listed, contracts may include language that creates exposure. That is why policy structure matters — not just checking a box.

FAR Part 28 (Bonds & Insurance) — Why It Matters

Federal contracts often include requirements tied to FAR Part 28, which addresses bonds and insurance. The goal is to protect the government and ensure contractors can perform the work and meet financial obligations.

Common FAR 28-related items you may see:

  • Bid Bonds — sometimes required to support the bid and reduce the risk of non-performance.
  • Performance Bonds — financial guarantee that the contractor will complete the work.
  • Payment Bonds — helps ensure subcontractors and suppliers are paid, often associated with construction.
  • Insurance Requirements — contracts may specify minimum coverage limits or specific certificate wording.
  • Flow-down Expectations — primes may require subs to carry certain coverages or provide COIs.

Important distinction: FAR Part 28 focuses on bonding and insurance concepts. Specific coverage types such as Commercial General Liability, Professional Liability (E&O), or Cyber Liability are typically defined in individual contracts, agency clauses, or prime contractor requirements.

FAR 52 Insurance Clauses — What Contractors Should Understand

While FAR Part 28 establishes the framework for bonding and insurance, individual contracts frequently incorporate specific insurance clauses from FAR 52 — most commonly FAR 52.228-5 (Insurance — Work on a Government Installation).

FAR 52.228-5 authorizes the contracting officer to require contractors to carry certain types of insurance in specified minimum amounts. The clause may require:

  • Workers’ Compensation and Employer’s Liability
  • General Liability for bodily injury and property damage
  • Automobile Liability if vehicles are used in performance of the contract
  • Coverage maintained for the full contract period
  • Certificates of Insurance provided before work begins

The clause allows the government to specify limits appropriate to the risk of the work. In some cases, additional insured wording or specific certificate language may be required.

It is important to understand that FAR 52 clauses are contract-specific. Not every federal contract includes the same insurance requirements, and limits may vary depending on scope, location, and risk exposure.

Key takeaway: Contractors should review Section I of the solicitation and Section H or other incorporated clauses carefully to identify insurance requirements before award — not after.

This summary is provided for informational purposes only and does not replace contract review or legal guidance. Insurance requirements are determined by the specific contract and contracting agency.

Why Contractors Choose EMD

Government contracting is not the same as standard commercial work. Insurance requirements can be more specific, deadlines can be tighter, and documentation accuracy matters.

EMD Insurance Solutions is a trusted source for businesses operating in the government contracting space because we focus on:

  • Clear guidance on what coverage is typically required and why
  • Helping you build a strong insurance foundation for contract work
  • Fast, accurate support for COIs and documentation needs
  • Coverage recommendations designed to support growth and long-term eligibility
Request a Government Contract Readiness Review

This selective, no-cost assessment is offered to businesses that meet baseline readiness criteria. Not all submissions are accepted. Government contracting advisory services are informational only. Insurance products are offered separately and subject to underwriting approval.