Every GC has dealt with a sub who went dark mid-project. The job goes sideways, the schedule slips three weeks, and you're left chasing certificates of completion nobody signed. Subcontractor default insurance — SDI — was built to handle exactly that. But it's widely misunderstood, and most trade subs in Florida don't know what their GC's SDI program actually covers or what it demands from them in return.

Here's what you need to know as a trade partner working with JK Prestige Constructor or any Florida GC running an SDI program.

Contractor qualification binder beside blank insurance documentation and a project notebook
Editorial illustrationTrade-partner qualification depends on real records: scope capacity, insurance, financial documentation, safety history, references, and the ability to perform the awarded work.

What Subcontractor Default Insurance Is

SDI is a first-party insurance product purchased by the general contractor, not the subcontractor. The GC pays the premium. The GC files the claim. The subcontractor is the covered party in the sense that their default triggers the policy — but the GC is the named insured.

The two dominant SDI programs in the country are Zurich's SubGuard and Arch Insurance's SubFulcil. Both work on a co-insurance model: the GC absorbs a deductible (often 10–50% of the loss), and the insurer pays the remainder up to policy limits.

SDI is not a performance bond. That distinction matters.

SDI vs. Performance Bond

A performance bond is a three-party agreement: the GC (obligee), the sub (principal), and the surety (bonding company). When a sub defaults, the surety steps in and either completes the work or pays the GC to complete it — up to the face value of the bond.

SDI is two-party: GC and insurer. When the sub defaults, the GC manages the recovery themselves, then files a claim for qualified costs. The sub is not party to the claim at all.

From a trade partner's perspective, the practical difference is this: if you're bonded, the surety may dispute your default aggressively to protect their exposure. If your GC runs SDI, the claim process is between the GC and their insurer. You may have less involvement — but you also have less leverage.

What a Default Means Under SDI

SDI programs define default specifically. Common triggers:

A slow sub is not a defaulted sub. A sub who misses one milestone but stays engaged is not a defaulted sub. The bar for triggering SDI is meaningful, and GCs don't file claims casually — every claim affects their SDI renewal pricing.

What JK Prestige Requires From Trade Partners

Even though SDI is purchased by JK, not the sub, there are obligations that flow to trade partners under any SDI-backed contract. Here's what we require:

Certificate of Insurance With Correct Limits

We verify this before the first NTP. The certificate must show:

JK Prestige Constructor must be listed as additional insured on GL and auto. The certificate holder address must be current. We reject expired certificates and follow up within 24 hours if anything is missing.

Executed Subcontract With Default Provisions

The subcontract spells out the cure period (we use 5 business days), what constitutes abandonment, and the GC's right to complete and back-charge. Trade partners need to read this section. If you have questions before signing, ask — we'll walk through it. Once you sign and mobilize, the clock on these provisions runs.

Lien Waivers and Supplier Documentation

SDI programs require the GC to demonstrate they managed the sub relationship actively. That includes collecting lien waivers — conditional waivers at each progress draw, unconditional waivers at final payment. If you're a framing or drywall sub carrying significant material costs, we need to see your supplier payment documentation before we release retainage. This is not distrust — it's the documentation our insurer requires for any claim.

Schedule of Values and Progress Reporting

SDI claims are cost-based. That means we need accurate SOVs from every sub and real-time visibility into where the work stands. A sub who goes two weeks without an updated schedule or status report creates documentation gaps that complicate our ability to file and recover if something goes wrong downstream.

Commercial planning table with abstract drawings, estimating tools, blank clipboard, and coordination materials
Editorial illustrationClear scopes and early coordination reduce the conditions that can become a default problem. The project team needs a common understanding of responsibility before work begins.

How SDI Affects Trade Partner Selection

The SDI premium is partially driven by the GC's historical claim rate. That means GCs running SDI programs have a direct financial incentive to pre-qualify trade partners carefully and remove marginal performers before default, not after.

At JK Prestige, we run a pre-qualification process for every new trade partner:

We do this because SDI doesn't make a bad sub good. It limits the damage when a qualified sub runs into genuine trouble. It's not a backstop for bringing in marginal performers.

Commercial space under selective demolition with retained ceiling grid, opened partition bays, and controlled work areas
Editorial illustrationWhen a trade package changes mid-project, the recovery plan has to document existing conditions, remaining scope, sequencing, and the work needed to protect the overall schedule.

What Happens When a Sub Is Declared in Default

Here's the realistic sequence on a JK project:

Day 1: Sub misses a milestone or goes dark. We make contact — phone, email, site visit if needed.

Day 2–3: If no response, we issue a written notice of concern with specific deficiencies cited and a response deadline.

Day 5 (cure period opens): If deficiencies aren't cured, we issue a formal Notice of Default. The cure period runs per subcontract — typically 5 business days.

Cure period end: If no cure, we declare default, take over the work (self-perform or bring in a replacement), and begin documenting replacement costs. SDI claim is initiated internally.

30–60 days post-default: Claim documentation submitted to the SDI carrier. The process involves invoices, schedule impact analysis, and evidence of the GC's mitigation efforts.

The replacement costs — premium labor, expedited material delivery, overtime to recover schedule — are what SDI covers. The original contract balance stays with the GC as an offset.

Questions Trade Partners Ask About SDI

Does SDI protect me if the GC falsely claims I defaulted?

SDI does not give the GC unlimited ability to declare default and walk away from your contract. The subcontract still governs. If a GC wrongly declares default, you have legal recourse — and the SDI claim process itself creates documentation that can be reviewed in litigation. Work with an attorney familiar with Florida construction law if you believe a default declaration was improper.

Should I still carry a performance bond?

Some project owners require bonded subs regardless of the GC's SDI program. Bond requirements flow from the owner's contract down through the prime. Check your subcontract carefully. JK Prestige does not routinely require bonding from trade subs, but we do on projects where the owner's contract mandates it.

Does SDI cover me if the GC fails?

No. SDI is the GC's policy for GC losses caused by sub default. If the GC fails — goes insolvent, abandons the project — your protection is the payment bond on the prime contract (if one exists), your lien rights under Florida Statute Chapter 713, and your contract documentation.

What Strong Trade Partners Should Know

If you're a trade partner who performs — hits milestones, controls your labor, documents your work, and keeps your COI current — SDI is a non-issue. You'll never trigger it. The requirements it creates (SOVs, lien waivers, schedule reporting) are things a professional sub is doing already.

Where SDI matters to you is in partner selection: if your GC has a clean SDI program with low historical claims, they've been selecting good trade partners. That tells you something about who you're working next to on the site.

JK Prestige has maintained its SDI-eligible insurance structure since 2017 by qualifying trade partners before signing, not by filing claims after things go wrong. The record speaks.

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Frequently Asked Questions

If my GC declares me in default under an SDI program, can I dispute it?
Yes. SDI does not give a GC unlimited authority to declare a default and walk away from your subcontract, the subcontract terms still govern the relationship. If you believe a default declaration was improper, you have legal recourse, and the documentation the SDI claim process generates can be reviewed in litigation. Talk to an attorney familiar with Florida construction law if you think a default was declared unfairly.
What insurance limits does JK Prestige require before a trade partner can start work?
JK verifies coverage before the first notice to proceed, and the certificate of insurance must show general liability of one million per occurrence and two million aggregate, statutory workers compensation, employer's liability of five hundred thousand per occurrence, one million combined single limit auto liability, and five million in umbrella coverage for trade work exceeding two hundred fifty thousand in contract value. JK Prestige must also be listed as additional insured on the general liability and auto policies. Expired certificates are rejected and gaps are followed up within 24 hours.
Does subcontractor default insurance protect me if the general contractor is the one who fails?
No. SDI is the GC's own policy against losses caused by a subcontractor's default, it does not cover you if the GC becomes insolvent or abandons the project. Your protection in that scenario is the payment bond on the prime contract, if one exists, your lien rights under Florida Statute Chapter 713, and your own contract documentation. Understanding this distinction matters before you assume SDI covers every risk on a job.