Subcontractor Default Insurance for Commercial Roofing Contractors
Subcontractor default insurance (SDI) protects general contractors and large roofing companies when their subcontractors fail to perform, abandon the job, or go bankrupt mid-project. If you rely on specialty sub-trades for sheet metal fabrication, spray foam application, or gutter installation, a subcontractor default can blow your budget, timeline, and reputation. SDI shifts that risk to an insurer instead of your balance sheet.
What It Covers
SDI covers the direct costs of subcontractor default including the additional expense to complete the defaulting sub's scope of work, delay damages and liquidated damages resulting from the default, legal costs to enforce the subcontract, and the difference in cost between the original subcontract price and the replacement contractor's price. If your sheet metal sub abandons a hospital project mid-fabrication, SDI pays for the replacement sub and any delay costs.
What It Does Not Cover
SDI does not cover subcontractors who were not pre-qualified under the program's standards. It excludes losses from your own default or failure to manage the project. Disputes over change orders, scope interpretation, or quality standards that don't constitute actual default are typically excluded. The policy requires robust subcontractor pre-qualification and monitoring processes.
Real Claim Examples
Your spray foam subcontractor declares bankruptcy halfway through a 200,000 square-foot warehouse roof, and the replacement sub charges $120,000 more to complete the work on an expedited schedule. A sheet metal fabricator misses critical deadlines on custom copings and gutters for a healthcare facility, causing $85,000 in delay damages and requiring an emergency replacement vendor. A waterproofing sub walks off a data center project after a payment dispute with their own supplier, costing you $60,000 in completion costs and schedule acceleration.
How Much It Costs
SDI premiums typically run 0.5% to 2% of total subcontracted value, making it significantly cheaper than requiring performance bonds from every sub. A roofing GC subcontracting $5M annually might pay $25,000 to $100,000 for SDI. The cost depends on the quality of your pre-qualification program, historical sub performance, and project complexity.
Why Work With Us for This Coverage
SDI programs require detailed subcontractor pre-qualification protocols that most agencies cannot help implement. We assist roofing GCs with building the pre-qualification frameworks that carriers require, and we connect you with the limited number of markets that write SDI for the roofing trade.
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