Designed as an alternative to bonding contractors, default insurance is first-party
insurance that compensates the insured in the event a covered contractor or
subcontractor fails to fulfill its contractual obligations. Insureds are required
to develop and implement rigorous contractor prequalification procedures and
to retain a percentage of losses. Generally, this coverage is best suited for
large projects or large general contractors with a significant percentage of
subcontracted work and established relationships with subcontractors.
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