Subcontractor Default Insurance (SDI) Consulting

Subcontractor Default Insurance (SDI) is an insurance product which can be very useful for construction companies seeking to reduce their risk related to subcontractors who might default on a project. SDI protects general contractors (GCs) from excess direct and certain indirect costs (per policy) in the case of a subcontractor default. Beacon provides a wide range of services to insurance companies related to SDI.

These services include:

  • Evaluating direct and indirect costs related to a subcontractor's default and the terms of the policy
  • Undertaking a cost-to-complete analysis related to the Subcontractor's work
  • Assisting insurers with the analysis and verification of SDI claims received (including detailed review of backup documentation related to the project and the subcontractor's role)

An insurance company must carefully review their potential risk when issuing an SDI policy, such as due diligence related to whether a subcontractor is prepared (financially, technically, and staffing-wise) to take on a project.