Surety Bond Quarterly - Winter 2017 - 24

25 J. Brad Robinson, Subcontractor
Surety Bonding and Default
Insurance: The Value (and Risk) of
Using Both Resources, SURETY
BOND QUARTERLY (Spring 2016),
NASBP, https://higherlogicdownload.
s3.amazonaws.com/NASBP/
bd33a733-16f0-4bbf-9ae08d97df85adac/UploadedImages/6-16/
Brad%20Robinson%20Sub%20
Surety%20Bndg%20Default%20
Ins%20March%202016.pdf.
26 Subcontractor Default Insurance
vs. Performance Bonds: Do You
Know the Difference? General
Insurance Services, http://www.
genins.com/img/~www.genins.com/
commercial%20lines%20articles/
subcontractor%20default%20
insurance%20vs.%20performance%20
bonds%20do%20you%20know%20
the%20difference.pdf.
27 Opinion Letter from Matthew K.
Cashion, Jr., President of NASBP
(June 9, 2003), on file with McGraw
Hill Companies, Inc.
28 Douglas Schrift, Subcontractor
Default Insurance: Markets,
Myths and Misconceptions,
Contractor Default Insurance, IRMI
CONSTRUCTION RISK CONFERENCE
(Nov. 10, 2015), https://www.
irmi.com/docs/default-source/
crc-handouts/2015-crc-handouts/
subcontractor-default-insurancemarkets-myths-and-misconceptions.
pdf?sfvrsn=8.
29 J. Brad Robinson, Subcontractor
Surety Bonding and Default
Insurance: The Value (and Risk) of
Using Both Resources, SURETY
BOND QUARTERLY (Spring 2016),
NASBP, https://higherlogicdownload.
s3.amazonaws.com/NASBP/
bd33a733-16f0-4bbf-9ae08d97df85adac/UploadedImages/6-16/
Brad%20Robinson%20Sub%20
Surety%20Bndg%20Default%20
Ins%20March%202016.pdf.
30 Susan L. McGreevy, Working on a
Subguard Project: Loss of Protection
for Subcontractors© (2006), https://
higherlogicdownload.s3.amazonaws.
com/NASBP/c1d78960-916e4da6-9bcd-6cd3d50b3ab7/
UploadedImages/Industry/
WorkingOnASubguardProject.pdf.
31 Andrew Zimmerman, Carl
Bloomfield & Shane Riccio,
Contractor Default Insurance: A
Nuanced Alternative to Performance
Bonds (May 10, 2013), http://www.
grahamco.com/KnowledgeCenter/
whitepapers/nuanced-alternativeto-performance-bonds/.
32 G. Scott Walters, SDI Insured Must
Shoulder Burden to Pursue Claims
Against CGL Policy, SURETY BOND

24

33
34

35

36

37

38

QUARTERLY (Spring 2016), NASBP,
http://www.suretybondquarterly.
org/2016/04/22/sdi-insured-mustshoulder-burden-to-pursue-claimsagainst-cgl-policy/.
See id. and discussion of Pavarini
case therein.
See Charles L. Bowman & Co. v.
Erin, 468 F.2d 1293 (5th Cir. 1972)
(holding that "matters bearing upon
the execution, validity, interpretation,
and obligations of contracts are
determined by the laws of the place
where the contract is made"); Bank of
N.Y. Mellon v. SACE S.P.A., No. 10 Civ.
2510, 2011 WL 102728, at *5 (S.D.N.Y.
Jan. 6, 2011) (holding that assignee
of an insurance contract is bound by
the policy's forum-selection clause);
American S.S. Owners Mut. Prot. &
Indem. Ass'n, No. 10 Civ. 8033, 2013
WL 1245451 (S.D.N.Y. Mar. 26, 2013)
(holding a non-signatory entitled to
receive benefits from an insured's
policy is bound by the insurance
contract's choice of law).
Travelers Indem. Co. v. Israel, 354 F.2d
488, 490 (2d Cir. 1965); Bioscience
West, Inc. v. Gulfstream Prop. & Cas.
Ins. Co., 185 So. 3d 638 (Fla. Dist.
Ct. App. 2016); see also Beazley Ins.
Co., Inc. v. Ace Am. Ins. Co., 150 F.
Supp. 3d 345, 358-59 (S.D.N.Y. 2015)
("[t]o the extent policies purport to
limit post-loss assignments, 'such
assignments are contrary to the
public policy of New York'"); NC
Venture I, L.P. v. Valley Forge Ins. Co.,
20 Misc. 3d 1133 (N.Y. Sup. Ct. 2008)
("While it is settled law in New York
that claim proceeds may be assigned
after a loss . . . where the policy
forbids assignment before a loss, that
condition will be upheld.").
See Lachmar v. Trunkline LNG Co.,
753 F.2d 8, 9-10 (2d Cir. 1985) ("Under
New York law . . . the assignee of
rights under a bilateral contract is
not bound to perform the assignor's
duties under the contract unless
he expressly assumes to do so.");
Citizens Prop. Ins. Corp. v. Ifergane,
114 So. 3d 190 (Fla. Dist. Ct. App. 2012)
("Although [the assignor] assigned
her right to benefits under the policy,
she did not assign to [the assignee]
her obligations under the policy.").
The presence of SDI coverage could
also influence the surety's ability to
collect money for past and submitted
claims. Careful review of the policy
language must be emphasized to
ensure the surety is taking actions
that comply with the policy guidelines
so coverage remains available.
The surety hits a roadblock if the
principal general contractor's
subcontractors do not qualify or

SURETY BOND QUARTERLY | WINTER 2017

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are not allowed to enroll in the
completing contractor's SDI program.
Even if they do qualify for purposes
of the SDI program, however, the
completion contractor may view
the already enrolled subcontractors
are less than quality subcontractors
and not want to continue using
them on the job (again, revealing an
unfavorable result of prequalification
being taken away from the
responsibility of the surety).
Coverage for defective work may run
for the duration set by the statute
of repose.
Peckar & Abramson, An Alternative
to Performance Bonds-Advantages
and Disadvantages of Subcontractor
Default Insurance for the General
Contractor (Apr. 30, 2014), http://
www.lorman.com/resources/
an-alternative-to-performance-bondsadvantages-and-disadvantages-ofsubcontractor-default-insurance-forthe-general-contractor-15813.
Subcontractor Default Insurance
vs. Performance Bonds: Do You
Know the Difference? General
Insurance Services, http://www.
genins.com/img/~www.genins.com/
commercial%20lines%20articles/
subcontractor%20default%20
insurance%20vs.%20performance%20
bonds%20do%20you%20know%20
the%20difference.pdf.
It is also noteworthy that SDI policies
grant the insured broad discretion to
determine whether a subcontractor
is in default of its contractual
obligations in the first place. Michael
S. McNamara, Subcontractor Default
Insurance-A Modest Rebuttal,
GRAVEL2GAVEL CONSTRUCTION
LAW BLOG (Mar. 1, 2016), http://
www.gravel2gavel.com/2016/03/
subcontractor-default-insurancemodest-rebuttal.html. Although
what actions or inactions constitute
a "default" are often the same
between the two risk alternatives, the
implication is that general contractors
may be more or less inclined to
declare a default depending on the
status of the project and without the
third-party surety to look to cover
the loss.
J. Brad Robinson, Subcontractor
Surety Bonding and Default
Insurance The Value (and Risk) of
Using Both Resources, SURETY
BOND QUARTERLY (Spring 2016),
NASBP, https://higherlogicdownload.
s3.amazonaws.com/NASBP/
bd33a733-16f0-4bbf-9ae08d97df85adac/UploadedImages/6-16/
Brad%20Robinson%20Sub%20
Surety%20Bndg%20Default%20
Ins%20March%202016.pdf.


http://www.suretybondquarterly.org/2016/04/22/sdi-insured-must-shoulder-burden-to-pursue-claims-agains-cgl-policy/ https://higherlogicdownload.s3.amazonaws.com/NASBP/bd33a733-16f0-4bbf-9ae0-8d97df85adac/uploadedimages/6-16/brad%20robinson%20sub%20surety%20bndg%20defaults%20ins%20march%202016.pdf http://www.genins.com/img/~www.genins.com/commercial%20lines%20articles/subcontrator%20default%20insurance%20vs.%20performance%20bonds%20do%20you%20know%20the%20difference.pdf http://www.genins.com/img/~www.genins.com/commercial%20lines%20articles/subcontrator%20default%20insurance%20vs.%20performance%20bonds%20do%20you%20know%20the%20difference.pdf http://www.lorman.com/resources/an-alternative-to-performance-bonds-advantages-and-disadvantages-of-subcontrator-default-insurance-for-the-general-contrator-15813 http://www.lorman.com/resources/an-alternative-to-performance-bonds-advantages-and-disadvantages-of-subcontrator-default-insurance-for-the-general-contrator-15813 http://www.genins.com/img/~www.genins.com/commercial%20lines%20articles/subcontrator%20default%20insurance%20vs.%20performance%20bonds%20do%20you%20know%20the%20difference.pdf http://www.genins.com/img/~www.genins.com/commercial%20lines%20articles/subcontrator%20default%20insurance%20vs.%20performance%20bonds%20do%20you%20know%20the%20difference.pdf http://www.irmi.com/docs/default-source/crc-handout/2015-crc-handouts/subcontrator-default-insurance-markets-myths-and-misconceptions.pdf?sfvrsn=8 http://www.irmi.com/docs/default-source/crc-handout/2015-crc-handouts/subcontrator-default-insurance-markets-myths-and-misconceptions.pdf?sfvrsn=8 https://higherlogicdownload.s3.amazonaws.com/NASBP/bd33a733-16f0-4bbf-9ae0-8d97df85adac/uploadedimages/6-16/brad%20Rabinson%20sub%20surety%20bndg%20default%20ins%20march%202016.pdf http://www.gravel2gavel.com/2016/03/subcontrator-default-insurance-modest-rebuttal.html http://www.gravel2gavel.com/2016/03/subcontrator-default-insurance-modest-rebuttal.html https://higherlogicdownlod.s3.amazonaws.com/nasbp/c1d78960-916e-4da6-9bcd-6cd3d50b3ab7/uploadedimages/industry/workingonasubguardproject.pdf https://higherlogicdownload.s3.amazonaws.com/NASBP/bd33a733-16f0-4bbf-9ae0-8d97df85adac/uploadedimages/6-16/brad%20rabinson%20sub%20surety%20bndg%20default%20ins%20march%202016.pdf http://www.grahamco.com/KnowledgeCenter/whitepapers/nuanced-alternative-to-performance-bonds/ http://www.grahamco.com/KnowledgeCenter/whitepapers/nuanced-alternative-to-performance-bonds/

Table of Contents for the Digital Edition of Surety Bond Quarterly - Winter 2017

NASBP Upcoming Meetings & Events
2017–2018 Executive Committee
From the CEO: Looking Backward to Reach Forward
Relationships for the Long Run
Subcontractor Default Insurance: Relevant Considerations for the Surety Claims Professional
Bottom Line Protection with Job Cost Accumulation & Allocation
Inside the AIA’s New Insurance and Bonding Contract Exhibit
The Calm After the Storm: Managing Disaster Response Contracts
Practical Tools to Help Jump-Start Your Company’s Cyber Plan
Index to Advertisers
Surety Bond Quarterly - Winter 2017 - Intro
Surety Bond Quarterly - Winter 2017 - cover1
Surety Bond Quarterly - Winter 2017 - cover2
Surety Bond Quarterly - Winter 2017 - 3
Surety Bond Quarterly - Winter 2017 - 4
Surety Bond Quarterly - Winter 2017 - 5
Surety Bond Quarterly - Winter 2017 - 6
Surety Bond Quarterly - Winter 2017 - 2017–2018 Executive Committee
Surety Bond Quarterly - Winter 2017 - 8
Surety Bond Quarterly - Winter 2017 - From the CEO: Looking Backward to Reach Forward
Surety Bond Quarterly - Winter 2017 - 10
Surety Bond Quarterly - Winter 2017 - Relationships for the Long Run
Surety Bond Quarterly - Winter 2017 - 12
Surety Bond Quarterly - Winter 2017 - 13
Surety Bond Quarterly - Winter 2017 - Subcontractor Default Insurance: Relevant Considerations for the Surety Claims Professional
Surety Bond Quarterly - Winter 2017 - 15
Surety Bond Quarterly - Winter 2017 - 16
Surety Bond Quarterly - Winter 2017 - 17
Surety Bond Quarterly - Winter 2017 - 18
Surety Bond Quarterly - Winter 2017 - 19
Surety Bond Quarterly - Winter 2017 - 20
Surety Bond Quarterly - Winter 2017 - 21
Surety Bond Quarterly - Winter 2017 - 22
Surety Bond Quarterly - Winter 2017 - 23
Surety Bond Quarterly - Winter 2017 - 24
Surety Bond Quarterly - Winter 2017 - 25
Surety Bond Quarterly - Winter 2017 - Bottom Line Protection with Job Cost Accumulation & Allocation
Surety Bond Quarterly - Winter 2017 - 27
Surety Bond Quarterly - Winter 2017 - 28
Surety Bond Quarterly - Winter 2017 - 29
Surety Bond Quarterly - Winter 2017 - Inside the AIA’s New Insurance and Bonding Contract Exhibit
Surety Bond Quarterly - Winter 2017 - 31
Surety Bond Quarterly - Winter 2017 - 32
Surety Bond Quarterly - Winter 2017 - The Calm After the Storm: Managing Disaster Response Contracts
Surety Bond Quarterly - Winter 2017 - 34
Surety Bond Quarterly - Winter 2017 - Practical Tools to Help Jump-Start Your Company’s Cyber Plan
Surety Bond Quarterly - Winter 2017 - 36
Surety Bond Quarterly - Winter 2017 - 37
Surety Bond Quarterly - Winter 2017 - Index to Advertisers
Surety Bond Quarterly - Winter 2017 - cover3
Surety Bond Quarterly - Winter 2017 - cover4
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