What does Default Insurance mean? Read on to discover the definition & meaning of the term Default Insurance - to help you better understand the language used in insurance policies.
Designed as an alternative to bonding contractors, default insurance is first-party insurance that compensates the insured in the event a covered contractor or subcontractor fails to fulfill its contractual obligations. Insureds are required to develop and implement rigorous contractor 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.
We hope the you have a better understanding of the meaning of Default Insurance.