FAQs by Contractors

FAQS by Contractors

It is never ideal to have a subcontractor default; however, if you do, here is what you need to know.

First, make sure you ask for feedback from your Carrier. After that, there are three simple steps:


1. Designate an internal point person who has both the time and authority to lead the effort and to retrieve all required documents.


2. Create an internal workflow to ensure  each team member (project management, financial/accounting and risk management) knows their role in each submission


3. Involve your Carrier early and often 

You should remain in constant contact with your Carrier to make sure the claim process flows smoothly.

How much time do you have?  To Proactive, the biggest difference is that SDI infuses money into a project quicker than surety bonds.  With surety bonds, carriers usually do an upfront study, whereas SDI is triggered immediately upon notice.  In addition, SDI places control in the general contractor’s hands, whereas the Carrier takes a more active role with the project with surety. There are many other differences.  Our firm recommends the Insurance Risk Management Institute (IRMI) for some great resources on both products.

An RFI is a request for information from the Carrier regarding missing materials.  If you involve the carrier early and often, RFIs should be minimal. Proactive recommends a continuous staging process, where you can allow the Carrier an “early look” at your submission documents, and you can collect feedback before making a formal submission.

There are 3 simple steps to achieving high yield (percentage of submitted costs that are reimbursed):


1. Designate an internal point person who has both the time and authority to lead the effort and to retrieve all documents.

2. Create a well-organized submission that relies on the knowledge of the project team, includes financial records that match the policy requirements and involves oversight from internal risk management

3. Collect continuous feedback from your Carrier prior to making your submission 

As early as possible. Please note that there are policy specific guidelines for early reporting. Every policy is different. Consult your broker and Carrier on your specific policy.

It is best to make sure you have a CPM schedule in place that demonstrates the impact of a default.  Without that tool, it can be difficult to prove that any delay was specifically caused by a default.

SDI has been utilized for over 25 years.

You can submit as often as your policy permits. Most policies involve a specified carrier review time, most typically 30 days, where the carrier does a detailed review of the cost submitted.  We recommend that you compile and stage additional documents during the review period so you can keep the flow of submissions moving. 

Claim submissions can begin as soon as the notice is provided to the carrier. We recommend that you begin the assembly of claim information as soon as possible because project teams often scatter after project completion is achieved, and you need their knowledge to effectively resolve your claim.


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