(a) Service-type insurance policies are cost-reimbursement type contracts or subcontracts in which the insurer provides claim and loss adjustment services on a cost reimbursement basis, which satisfies state and Federal insurance requirements.
(b) Service-type insurance policies may be used with contracting officer approval, when one or more of the following conditions are present -
(1) Pure risk commercial insurance is not available or, if available, cost is not considered reasonable;
(2) Inherent risks in the contract are new and a part of the process of commercialization;
(3) The service-type insurance is needed to implement jointly funded projects; or
(4) The service-type insurance arrangement is considered in the Government's best interest.
[61 FR 41708, Aug. 9, 1996, as amended at 74 FR 36366, July 22, 2009]