What is a waiver of subrogation?
Short answer
A waiver of subrogation is policy wording that gives up the carrier's right to pursue another party for a loss it paid. It is usually added by endorsement at a client's or landlord's request, and the carrier has to grant it in writing, since a certificate or contract clause alone does not create it.
How subrogation works first
When a carrier pays a claim, subrogation lets it step into your shoes and pursue whoever caused the loss to recover what it paid. If a subcontractor's error caused a fire your property policy covered, the carrier can seek reimbursement from that subcontractor. A waiver removes that right for a specified party.
How a waiver endorsement works
The waiver is granted by endorsement, naming either a specific party or a blanket class of parties such as clients under written contract. It typically applies only to losses the policy covers, and only to the named party. Without the endorsement, a contract clause promising a waiver leaves you in breach of that contract even though your policy is otherwise in force.
Who asks for one
- Landlords and property managers under commercial leases
- General contractors and project owners requiring it from subcontractors
- Enterprise clients in vendor and services agreements
- Lenders and franchisors reviewing risk allocation
What it costs and when carriers refuse
Many carriers grant blanket waivers at no charge on general liability; others charge a small premium or restrict it to scheduled parties. Carriers may decline when the other party's negligence is a major part of the exposure, when the waiver is unlimited, or when the contract requires it for exposures the policy does not cover.
Before you sign the contract
- Confirm your carrier grants the waiver, and get it in writing
- Check whether it applies per project or to all written contracts
- Confirm the endorsement is in force on the date work begins
- Keep the endorsement with the contract file, not just the certificate
Common questions
- Is a waiver of subrogation the same as additional insured status?
- No. Additional insured status gives another party protection under your policy. A waiver of subrogation gives up your carrier's right to recover from that party after paying your claim. Contracts often require both, and each needs its own endorsement.
- Does a waiver of subrogation increase my premium?
- Sometimes. Many carriers include blanket waivers at no additional charge on general liability, while others apply a small charge or restrict availability. Pricing is set by the carrier's underwriting guidelines.
- Can I promise a waiver in a contract without checking my policy?
- You can sign it, but you may be unable to perform. If the carrier will not grant the waiver, you have accepted a contractual obligation you cannot meet, which is a common source of professional liability claims against agents and brokers.
- Does a waiver of subrogation cover the other party's own negligence?
- The endorsement waives recovery for covered losses, but the scope depends on the wording. Some forms limit the waiver to losses arising out of your work, so read the endorsement rather than assuming it covers everything.
Want to know what this means for your business?
Tell us what you do and we will explain which coverage responds, which wording to check, and what to ask a carrier. No obligation, and no coverage is bound by asking.
Professional Resource Insurance Agency, LLC. CA License #0G81238. Definitions are general information, not coverage advice for a specific policy.