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Subcontractors Default Insurance (SDI) or Subguard is one of the essential tools that general contractors should have in the construction industry. This insurance aims to give protection to the contractors in case a subcontractor breaches the contract.
The growth of Subcontractor Default Insurance policy comes in tandem with more complex and competitive construction projects, so it is more crucial than ever for contractors to understand how SDI works. Otherwise, they risk losing their money investment as well as ruin their project deadlines.
It is a type of insurance that ensures coverage for general contractors in case a subcontractor does not adhere to a particular contract. Apparently, this default can involve, but is not limited to, the following:
“Failure to perform: The subcontractor fails to ensure the terms of the contract are met.
Insolvency– The subcontractor has gone bankrupt and is unable to honour his side of the contract.
Abandonment – For reasons unknown once the subcontractor has started the project he walks away.
SDI however is not unlike other traditional surety bonds. It focuses on securing the general contractors from incurring losses related to the failure of a subcontractor.
Therefore, this ultimately allows the contractor to have a better management of the contractor risk and rights to speed up the entire claims process of the project.
There are several advantages of SDI for general contractors. These include;
Control over Risk Management: The contractor has the option of setting a benchmark for a default of a subcontractor instead of having to blindly follow the surety company’s set standards.
Insurance Coverage for Indirect Costs: SDI policies tend to allow not only for direct costs when in the process of completion but also other indirect costs such as liquidated damages, project delay, and extended overhead.
Broad Coverage: Spend time writing one contract and issue a single polices across numerous or multiple subcontractors on a project.
Flexibility: Choosing from varied policy structures including a policy which allows retrospective premium adjustments based on performance.
By purchasing an SDI policy, general contractors are transferring the risk of defaulting on their subcontractors to an insurance company. Generally these steps occur:
Insurance Policy: Depending on the completion timelines, the contractor’s prequalification and management of subcontractors are all evaluated by the insurer to determine risk and costs.
Coverage Clause: Performance default, insolvency, and many other events will be covered in the scope of the policy.
Claims Process: If a subcontractor defaults, the contractor is able to file a claim with their insurance company and the firm will proceed to investigate whether the claim is valid and pay out the covered loss.
Subguard insurance policies typically cover:
Direct Costs:
Indirect Costs:
The price of Subguard insurance is influenced by a number of factors which most of the time differ from state to state, country to country.
Typical monthly premiums for Subguard insurance can range widely. For instance:
| Provider | Monthly Cost | Annual Cost |
| NEXT | $1,300 | $15,600 |
| Liberty Mutual | $2,000 | $24,000 |
| Berkshire Hathaway | $3,000 | $36,000 |
| Zurich | $3,500 | $42,000 |
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Always target construction-oriented insurance providers for SDI. The best include:
They are well known for a heavy focus on construction projects and personal service. General contractors can turn out to be their ideal customer as they get specific policies that are constructed for them.
Pros:
Cons:
Rating: 9/10
Along with SDI, they also provide a variety of insurance products. In these respects, they are well-known – flexibility of policy terms and solid financial strength.
Advantages:
Cons
Rating: 8/10 .
The NEXT Insurance is quite impressive because it has made a niche for itself in offering its services to small contractors. Offering subcontractor default insurance and other services of subcontracting seem easy with their site.
Rating: 9/10
Has been at the forefront of developing SDI products since the late 1990s. They have earned a compelling reputation as reliable providers of cover and also assist greatly throughout the prequalification of the subcontractor process.
Rating: 8.5/10
10 / 10
For me this company has proven to be the best to do business with and worth my hard earned money. Contractors this is your company look no further.
7.7 / 10
Decent experience with Hiscox business insurance
10 / 10
Good company. Good and knowledgable customer service. If they don't know something they will pass you on to a more experienced rep that is more knowledgable. So far so good.
10 / 10
Best insurance ever
10 / 10
Coolest concept, I wish this was applied to other insurance products too.
9.4 / 10
Fastest ever online insurance quote and purchase! Also, great rates and professional customer reps that helps with whatever you need, if you need. Nice company!
2.8 / 10
Embroker sells a product that it doesn't honor. We purchased a combination D&O and EPLI policy. However, when it came to renewal, it told us that we only had D&O coverage even through our ACCORD certificate clearly mentions we have both. Basically they refused to honor the EPLI coverage and will leave you hanging with the bag. At time of renewal, they more than doubled our quote to get similar coverage. Basically BAIT & SWITCH. Unacceptable tactics. Easy to buy and pay but you may not be... Read More
2.8 / 10
Great platform. Terrible policy. There is no teeth behind it. No coverage. It's a fake policy that they sell. Sold us an EPLI policy that later we came to find out had no EPLI coverage. Amazing that they can get away with outright fraud. Check the positive reviews. They are all 'Anonymous' posted by Emroker staff. Stay away and find a real policy that will actually provide you coverage. We've been bitten by them and hope to find restitution via a lawsuit.
Paul Burns Insuranker
Policy Type: Business Insurance
Company name: Berkshire Hathaway GUARD Insurance Companies
0 / 10
It has been 70 days since I made a claim on the roof of my building. No one from the company will return calls. We are in hurricane season and located in Louisiana. My building is tarped to secure it.
Felicia Broadus Insuranker
Policy Type: Business Insurance
Company name: Berkshire Hathaway GUARD Insurance Companies
0 / 10
They are the worst, my truck was hit in January 23 and the claim adjuster has not been out to this very day! They have every excuse in the book as to why. They have not been to the collision shop. PLEASE AVOID THESE SCAM ARTIST!
Felicia Broadus Insuranker
Policy Type: Business Insurance
Company name: Berkshire Hathaway GUARD Insurance Companies
0 / 10
Avoid these SCAM ARTISTS! They don’t pay claims!!! Save yourself the trouble and money!
Kasey Arey Insuranker
Policy Type: Business Insurance
Company name: Berkshire Hathaway GUARD Insurance Companies
0 / 10
This company gives you a price that was in place for a year and when you have to use it there is fine print were they can go back and charge you more. Would not recommend them to any one. Crooks
John Murphy Insuranker
Policy Type: Business Insurance
Company name: Berkshire Hathaway GUARD Insurance Companies
0 / 10
Worst insurance comapny I have ever dealt with. A commercial vehicle represented by GUARD t boned my wife and daughters family vehicle in the middle of the day. Driver was cited and insurance claim insued. Fast forward 4 months and refusal of full amount of claim is still happening. Driver was found guilty, repairs started on my vehicle and when it comes to the final bill and diminished value we cannot get any help. I am out a family car, have an injured and traumatized wife and children,... Read More
Harshadray Patel Insuranker
Policy Type: Business Insurance
Company name: Berkshire Hathaway GUARD Insurance Companies
0 / 10
Extremely bad service, when you call , will make you wait on the phone for ever (over an Hour) and still no one to answer , so you end up hanging up. To cancel the policy, bounce you from one department to the other. They are supposed to refund from the date other insurance started and after sending the proof of other insurance policy, still they did not refund based on that actual date instead they use the date i managed to get hold of them. They charged me $7000.00 for a year's insurance on... Read More
Aaron Wensel Insuranker
Policy Type: Business Insurance
Company name: Berkshire Hathaway GUARD Insurance Companies
0 / 10
Guard Insurance is terrible. They were so bad I cancelled them because them couldn't figure out why I would never get a paper copy of the bill . Verified my address with them and still intermittent billing. I cancelled them in March through my local broker. Today 6/27 I get a letter in the mail from a collections company saying I owe 87.97. This was the first myself or my broker heard of owing this money. Here is some advice for this failure of a company send me a god damn bill and I will pay.... Read More
Michael Swink Insuranker
Policy Type: Business Insurance
Company name: Berkshire Hathaway GUARD Insurance Companies
0 / 10
My employer had to have workers compensation by law. He obtained a policy through this Berkshire Hathaway GUARD and they failed me. I fell from a ladder and fractured my spine in 7 different places, my clavicle in 4 places, and the base of my skull. Going to my Dr visits I was prescribed medication for pain and the insurance company placed a pre-authorization hold on me picking up the medication from Walgreens. The hold lasted 5 days! My weekly benefits have never been on time, right now... Read More
10 / 10
Liberty Mutual is one of the more simple companies to deal with. I had to file a claim for my business owner policy after I caught one of my employees stealing a large amount of products from my business. Liberty mutual paid the claim fast and with no efforts. I wish the legal process was as easy…
10 / 10
For me this company has proven to be the best to do business with and worth my hard earned money. Contractors this is your company look no further.
7.7 / 10
Decent experience with Hiscox business insurance
9.4 / 10
Very pleased with Hiscox - their small business insurance rates are very good and they specialize in small business which gives me a peace of mind as a small business owner. So far so good!
10 / 10
Their customer service is absolutely fantastic. Very patient, knowledgable and provided excellent explanation of the purchased policy. I would highly recommend this insurance company to anyone that's looking to protect their business from unexpected expense. Thank you Hiscox for doing a great job for my business!
0.6 / 10
STAY AWAY! I wouldn't recommend hiscox small business liability insurance to anyone. Better not waste both your money and your time. Hiscox customer service is extremely unpleasant, not organized and not professional. It is the worst company we have dealt with in almost 25 years in business!
10 / 10
Good company. Good and knowledgable customer service. If they don't know something they will pass you on to a more experienced rep that is more knowledgable. So far so good.
10 / 10
Extremely fast and simple. Wasted a lot of time and money until I found these guys! I feel like my business is in good hands now.
10 / 10
Hiscox's the best! My business is insured with them for over 12 years and am not planning to switch!
10 / 10
Excellent experience with Hiscox BOP for my coffee shop. They provided all it needed.
10 / 10
My HI barbershop is well covered with their great BOP product for 5 years already! not planning to switch!
10 / 10
Best insurance ever
10 / 10
Coolest concept, I wish this was applied to other insurance products too.
10 / 10
Great experience
6 / 10
Didn't relate to the concept much, but it makes sense if you need insurance to go
0 / 10
It doesn't really feel sustainable to me and doesn't offer business interruption, product liability and commercial property insurance. They have no local agents and despite their technology first approach you cannot file claims online. Additionally, product manufacturers are not covered by Thimble and they don't provide enterprise solutions.
10 / 10
As a contractor that works 3 times a week for a few hours, Thimble gets really handy for me and saves me money. I have no use for these massive business insurance coverages offered by traditional insurance companies.
10 / 10
Excellent concept which is useful to many small businesses!
10 / 10
Been waiting for this type of solution for a long time!
10 / 10
Love their business insurance solutions for freelancers! Great app!
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