How Subcontractor Default Insurance (SDI) Can Protect Your Project’s Balance Sheet, Timeline and Delivery

Why Choose SDI?

Top-tier fleets are being affected by:

• Comprehensive Protection: SDI covers both direct and indirect losses, including costs to replace defaulting subcontractors, unpaid suppliers, non-conforming work, schedule delays, and legal expenses.
• Greater Control: Unlike traditional surety bonds, SDI puts control in the hands of the general contractor by reducing the number or parties from three to two, giving the GC the control of potential “default.”
• Cost-Effective: SDI rates are in line with surety bonds, but their rate flexibility makes it easier to manage costs and stay on budget.
• Broad Coverage: SDI covers almost all subcontractors and suppliers under a single policy, providing consistent and reliable payment and performance guarantees.
• Simplified Claims Process: Claims are processed quickly, with reimbursements made within 30 days after proof of loss, minimizing project delays and adversarial disputes.
• Supports Project Goals: SDI helps ensure on-time, on-budget, and quality project delivery while enabling the use of local and diverse subcontractors (MBE/DBE/WBE).
• Prequalification of Subcontractors: General Contractors typically find that SDI helps improve their internal subcontractor prequalification process to better protect their balance sheet.

Why Not Just Bond?

Traditional subcontractor bonds often involve complex investigations, limited coverage, higher costs, and potential project delays. SDI offers a streamlined, flexible alternative that aligns the interests of the project owner, general contractor, and insurer.

Added Value for Project Owners

• Less litigation risk with two-party agreement
• Improved performance by enhancing sub-prequalification risk to better protect the project owners and general contractor
• Flexible completed operations tail coverage – covered through warranty period or statute
• Enhanced coverage for soft costs, which can include:
  • Liquidated damages
  • General conditions
  • Third-party professional dues
  • Expedited material expenses

In Summary

SDI is a proven, cost-effective insurance solution that lets general contractors manage subcontractor risk proactively, protects project owners, and helps keep construction projects on track. Discover how SDI can add value to your next project.