Waiver of subrogation

Normally, when your insurer pays a claim that someone else caused, it can try to recover the money from them. That’s subrogationSubrogationSubrogation is an insurer’s right, after paying your claim, to pursue the person or company that caused the loss to recover what it paid.Read the definition. A waiver of subrogation gives up that right against a specific party, usually because a contract asks you to.

How it works

A lease, subcontract or client agreement may say you’ll waive subrogation against the other party. That promise is between you and them, but it affects your insurer, because the recovery right belongs to the insurer once it pays. So the waiver generally needs to be allowed by your policy, often through an endorsementEndorsementAn endorsement is a written change to an insurance policy that adds, removes or modifies coverage, such as adding an additional insured or a new location.Read the definition.

Waiver endorsements come in two forms:

• Blanket, which applies to anyone you’ve agreed in a written contract to waive against.
• Scheduled, which names specific people or organizations.

Insurers may charge for the endorsement, especially on workers’ comp, because it gives up a possible recovery. How waivers work in workers’ comp can also depend on your state.

Where you’ll see it

• Construction contracts, where general contractors ask subs to waive subrogation on general liability and workers’ comp, often alongside additional insuredAdditional insuredAn additional insured is a person or company, such as a landlord or client, added to your liability policy so it can protect them from claims tied to your work.Read the definition status and primary and noncontributoryPrimary and noncontributoryPrimary and noncontributory is policy wording that makes your insurance pay first for a covered claim, without asking the additional insured’s own insurance to share the cost.Read the definition wording.
• Commercial leases, where landlord and tenant often waive against each other for property damage, so each side’s property insurer pays its own loss.
• Client service agreements, especially with larger companies.

A certificate of insuranceCertificate of insuranceA certificate of insurance (COI) is a one-page summary that proves your business has insurance, listing your policies, limits, insurers and policy dates.Read the definition may show that a waiver applies, but the certificate alone doesn’t create it. The policy has to include it.

An example