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(CDR-3193) How to Best Prepare for and Navigate a Subcontractor Default Insurance (SDI) Claim

Level: Basic
Venue: 2019 AACE International Conference & Expo, June 16-19, 2019, New Orleans, LA, USA

Abstract: Subcontractor default insurance (SDI) policies are more frequently being carried in lieu of standard payment and performance bonds. While there are many advantages to utilizing SDI, it is a common misconception with these policies that when a default occurs, reimbursement for costs incurred are instantaneous and simple.

Navigating the completion of work, mitigation of loss, compliance with policy and contractual obligations, and reimbursement of costs in a subcontractor default scenario can be very challenging yet greatly facilitated by comprehensive project controls and contract administration. This article will outline the circumstances of SDI claims, different types of costs that may result from their occurrence, and the necessary measures to implement before, during, and after to ensure the most optimal outcome for all parties. The article is written as a guide to a contractor but is essentially also an indication to the SDI carriers what they can and should expect from an insured.