(a)(1)(A) DoN policy is to rely upon the commercial insurance industry to the maximum extent practicable to protect contractors against risks arising under contracts. However, it may be preferable or necessary to provide Government indemnification--
(1) Where there is a continuing program, such as for nuclear vessels, and insurance premium costs over a period of time could equal the amount of coverage;
(2) Where war risk is involved;
(3) Where the cost of insurance is so excessive it is unreasonable and constitutes a "turndown quotation";
(4) Where the Government risk is rated only on its isolated experience and not shared with the risks of others, whether or not the risk is unusually hazardous;
(5) Where an urgent requirement allows insufficient time to receive a competitive insurance quotation;
(6) Where the degree of risk is either very small or catastrophic; or
(7) Where indemnification of the deductible portion of insurance coverage will substantially reduce insurance costs.
(b) All matters concerning indemnification should be referred to DASN(ACQ) for decision or recommendation sufficiently in advance of contract award.
G5228.305 (PGI 228.305) Overseas workers' compensation and war-hazard insurance.
(d) Submit requests for waiver through DASN(ACQ).
SUBPART G5228.90--INSURANCE UNDER LEASES
When Government property is leased under the authority of 10 U.S.C. 2667, the lessee, at its own expense, should insure the property and the liabilities of itself and the Government to third parties, including employees.
The requirement to insure the property may be waived by DASN(ACQ) when more than 75% of its use is for Government work. In such case the Government will assume the risk of loss or damage to the property and the lease will be modified accordingly.
(a) Where insurance is required, the lease should require the lessee to:
(1) purchase and maintain Fire and Extended Coverage insurance or its equivalent and, if applicable, Boiler and Machinery insurance, in an amount equal to replacement value less depreciation or in any lesser amount determined by the contracting officer.
(2) provide insurance on special types of property (e. g., floating drydocks, mobile power plants, etc.) as designated by lessor.
(b) When a co-insurance clause is used, failure of the lessee to maintain adequate insurance does not relieve the lessee of its responsibilities under any other terms of the lease.
G5228.9003 Insurance policies.
(a) Insurance policies for leased property should be issued in the names of the lessee and of the Department of the Navy and contain a loss payable provision as follows: "Loss, if any, under this policy shall be adjusted with (Lessee) and the proceeds, at the election of the Government, shall be payable to the (Lessee); any proceeds not paid to the (Lessee) shall be payable to the Treasurer of the United States."
(b) Each insurance policy should contain a provision for thirty days prior notice to DASN(ACQ) in the event of cancellation of the policy.
(c) A certificate of insurance or copy of each insurance policy should be deposited with DASN(ACQ).