COVID-19 Impacts on Subcontractor Default Insurance and Ripple Effects

Ripples in water

SDI is first-party insurance that compensates the general contractor insured in the event a covered subcontractor fails to fulfill its contractual obligations.

April 20, 2020
Smith Currie

Subcontractor default insurance (“SDI”) may be described as an alternative to bonding subcontractors. SDI is first-party insurance that compensates the general contractor insured in the event a covered subcontractor fails to fulfill its contractual obligations. Under SDI policies, general contractor insureds are obligated to develop and implement rigorous subcontractor prequalification procedures.

Basic questions and answers about how SDI might come into play and impact the construction industry in response to COVID-19 follow:

Who may make a claim on an SDI policy?

The general contractor may make a claim. An Owner may make a claim if the general contractor becomes insolvent in many cases. Subcontractors may not make claims on SDI policies.

The Smith Currie firm may be contacted at info@smithcurrie.com



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