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.