Government Contractors – Is Immunity Enough?
ny companies that are in the Federal Government Contractor (FGC) space need to strike a balance between competitive market dynamics and exposure to risk. While the unique liability immunities available to FGCs may be a key component of the overall risk management plan, consider these scenarios:
Third-Party Bodily Injury – Product Liability
The Government Contractors Defense (GCD) is a form of immunity, typically for third-party liability claims, available to Federal Government Contractors. While it is certainly protection, it is not an automatic shield from liability. Further, because the GCD is a legal defense, it does not provide relief from legal expenses incurred in defending a claim for damages.
Risk potential: Under the GCD, a company may be relieved of liability by a court; however all costs to defend the suit will be your responsibility.
Financial Injury – Service Failure
Again the Government Contractors Defense is not an automatic shield from liability; in the case of one business partner suing another, there is little applicability of the GCD.
Risk potential: Litigation ensues between a prime contractor and subcontractor for financial injury related to the failure of the subcontractor’s service as part of a contract with the Federal Government. Business partner litigation due to reasons of delay or simple performance failures are not protected by the GCD.
By working with insurers that can construct insurance policies that reflect unique FGC exposures, KMRD Partners can help protect FGCs when immunities may fail.
Need to deliver better risk management results for your company? Schedule a brief demo of our risk management system, KMRD XChange.