Skip to Content

default insurance

Default insurance is an alternative method of financing the risk of contractor default (versus performance bonds.) Used primarily by general contractors to manage the risk of subcontractor default, default insurance is first-party insurance that compensates the insured in the event a covered subcontractor fails to fulfill its contractual obligations.

On This Page

Additional Information

Contractors buying this insurance are required to develop and implement rigorous subcontractor 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. Sometimes still referred to by the original product of this type, Subguard, there are now several markets active in this coverage line.


subcontractor default insurance