Overview
Subrogation is an insurer's right, after paying your claim, to pursue whoever actually caused the loss to recover what it paid. A waiver of subrogation gives up that right against a specific party — commonly the other side of a contract.
Landlords, general contractors, and project owners commonly require waivers so that a loss on the project or premises does not turn into insurer-versus-insurer litigation between the contracting parties.
How a waiver of subrogation works
Suppose your insurer pays a claim that a business partner's negligence arguably caused. Normally the insurer could sue that partner to recover the payment. If your contract with that partner included a waiver of subrogation — and your policy permits it — the insurer gives up that recovery, and the loss stays where the parties agreed it would.
Where the requirement appears
- Construction contracts — commonly on general liability and workers' compensation
- Commercial leases — commonly mutual, on property policies, so each side's insurer absorbs its own losses
- Master service agreements in energy, telecom, and facility services
- Equipment leases and some vendor and franchise agreements
What to check before agreeing
- Your policy must permit waiving subrogation — commonly via a blanket or scheduled endorsement; waiving without one can jeopardize coverage
- Workers' compensation waivers commonly carry a premium charge, often a percentage of the payroll on the affected job
- Prefer waivers limited to the specific project or premises over open-ended ones
- Mutual waivers are commonly fairer in leases than one-way waivers
Related coverages
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Frequently asked questions
Does a waiver of subrogation cost money?
On general liability, blanket waiver endorsements are commonly included or inexpensive. On workers' compensation, carriers commonly charge a percentage of the payroll tied to the waived work, which shows up at audit.
Can I agree to a waiver my policy doesn't allow?
Doing so risks a coverage problem: policies commonly prohibit impairing the insurer's recovery rights after a loss without permission. Confirm the endorsement is in place before signing the contract.
Is a waiver of subrogation the same as additional insured status?
No. Additional insured status extends your coverage to another party. A waiver of subrogation limits your insurer's recovery rights against them. Contracts commonly require both, but they are separate endorsements.