SDI protects GCs from the cost of subcontractor default, if their prequalification is solid.
In this article
Why it exists
Subcontractor failure delays projects and adds costs. SDI is an alternative to requiring bonds from every sub.
Coverage
Costs to complete and correct work.
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Versus bonds
The GC controls the claim.
Prequalification
Insurers require a strong process.
Deductibles
Often large.
Claims
Documentation is critical.
Cost
Priced on subcontract value.
Fit
Usually larger GCs.
Where to start
Review your subcontractor prequalification process before considering SDI.
Common mistakes
Weak prequalification, poor documentation and ignoring deductibles.
An example
A GC using SDI had a drywall sub go out of business mid-project. Clear documentation of the default and completion costs made the claim straightforward.
What to track
Track subcontractor prequalification scores, enrolled subcontract values and default incidents.
Questions to ask
Is our prequalification strong enough for SDI? What deductible can we afford? How will we document a default?
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Frequently asked questions
What is subcontractor default insurance?
It is insurance purchased by a general contractor that covers costs from a subcontractor's default, subject to deductibles and policy terms.