Subcontractor default insurance protects the general contractor from some losses incurred when a subcontractor defaults on its project. This insurance is frequently used when bonded subcontractors are required but a particular subcontractor cannot obtain a bond.
The default insurance includes costs to complete the unfinished portion of the subcontractor’s work in case of default, but there is usually a deductible or copay provision attached to the policy and a cap on the amount of the liability.
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