A general contractor’s failed bid to tap a surety bond in a $7-million concrete job underscores the high bar for triggering insurer liability.
On June 24, 2025, New York’s Appellate Division, First Department, ruled that Silverite Construction Company couldn’t pursue claims under a performance and payment bond issued by Westchester Fire Insurance Company. The court found Silverite hadn’t met key conditions required to activate the bond, cutting off its attempt to shift liability to the insurer.
The dispute began when Providence Construction Corp., a subcontractor hired by Silverite, sued for $1.14 million in unpaid work. Providence had been contracted to install concrete blocks under a deal that set a lump sum price, later adjusted by change-order to $7.1 million. Silverite had already paid just under $6 million but stopped short after it claimed there were discrepancies between its records and what Providence said had been installed.
To back its position, Silverite hired an expert who used a proprietary 3D imaging method to assess the actual number of blocks placed. Based on that analysis, Silverite refused to pay the remaining balance and counterclaimed, alleging overbilling, defective work, project delays, and unpaid subcontractor bills totaling $500,000.
Providence pushed back with a motion for summary judgment, asking the court to rule in its favor outright. It also sought to dismiss Silverite’s third-party claim against Westchester Fire, the insurer behind its performance and payment bonds.
While the court declined to resolve the main dispute, finding that questions remained about how the lump sum should be calculated, it did side with Providence on the insurance issue. The court found Silverite failed to show that it had declared a default or given proper notice, both of which were required steps to make a valid claim under the bond terms. Without those, the court ruled, Westchester Fire had no obligation to step in.
Providence also asked for legal fees under the subcontract, but the court said that issue was premature until it’s clear who the prevailing party is.
The case highlights a critical takeaway for insurance professionals and contractors alike: surety coverage isn’t automatic. Courts expect claimants to follow the bond’s conditions to the letter, and when they don’t, insurers can walk away without footing the bill.
