Navigating Performance Bonds, Subcontractor Default, and CGL Coverage for Defective Workmanship and Property Damage

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, December 13, 2016

Recorded event now available

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Program Materials

This CLE webinar will provide construction and insurance counsel with a review of the key differences between CGL insurance, performance bonds and subcontractor default insurance in covering risk for owners and contractors emanating from defective workmanship and property damages. The program will provide owners and contractors with best practices to minimize the risks for construction defects and property damage through insurance and performance bonds. The program will also provide the perspectives of the insurer or surety in covering these risks.

Description

CGL insurance and performance bonds are two common financial risk mitigation tools in construction projects. While there are some similarities, insurance and surety bonds cover very different risks. The lines between CGL coverage and performance bonds often become blurred when there are defective workmanship claims due to a contractor’s default or nonperformance or property damaged at a project by a contractor.

SDI can be a viable alternative to performance bonds, depending on the size and scope of the project. SDI policies are purchased by the project manager and obligate the insurer to reimburse costs incurred because of subcontractor default. SDI policies often have lower premium costs than surety bonds and tend to give the prime contractor more flexibility in resolving subcontractor defaults.

Practitioners representing project owners, contractors, insurers or sureties must have a thorough understanding of the differences between CGL policies, performance bonds and subcontractor default insurance, the protections provided, when each comes into play, and where they overlap.

Listen as our authoritative panel of construction practitioners explains the distinctions between CGL insurance and performance bonds and SDI, where there is potential overlap and interplay between CGL policies and performance bonds for defective workmanship and property damages, and best practices for minimizing risk and maximizing coverage.

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Outline

  1. Performance bonds
  2. Subcontractor default insurance
  3. CGL coverage
  4. Faulty workmanship
  5. Property damage
  6. Owner/contractor vs. insurer/surety perspective

Benefits

The panel will review these and other key issues:

  • What are the distinctions between CGL policies and surety bonds?
  • Where might performance bonds and CGL policies overlap in the context of a contractor’s default or other nonperformance?
  • How has the recent expansion of CGL coverage for defective workmanship led to confusion with coverage under a performance bond?
  • What are the key advantages of SDI, and what are the drawbacks that must be considered?
  • How does SDI differ from traditional performance bonds?

Faculty

Michele Leo Hintson, Esq.
Michele Leo Hintson, Esq.

Partner
Schumaker Loop & Kendrick

Ms. Hintson has over a decade of experience handling a wide variety of disputes, including those involving payment and...  |  Read More

Kirk D. Johnston
Kirk D. Johnston

Partner
Smith Currie & Hancock

Mr. Johnston focuses his practice in the areas of construction litigation, risk management and transactional...  |  Read More

Michael S. McNamara
Michael S. McNamara

Partner
Pillsbury Winthrop Shaw Pittman

Mr. McNamara's practice focuses on litigation of complex construction and engineering disputes, frequently...  |  Read More

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