Prime Contractors, Subcontractors and the Role of Default Notification in SDI Coverage

Subcontractor Default Insurance (SDI) is marketed as a substitute for a subcontractor performance bond, providing coverage for a prime contractor’s losses due to a subcontractor’s failure to perform on a project. In a recent article for the American Bar Association, colleagues Michael S. McNamara and Lexie R. Pereira dispel a common misconception regarding whether a subcontractor must be declared in default to trigger SDI coverage under several common policy forms.