Waiver of subrogation: what it is and what to verify
Learn what subrogation is, why contracts require a waiver of subrogation on GL, auto, and workers' comp, and how to confirm the endorsement is really in place.
A waiver of subrogation is an agreement, usually added to a policy by endorsement, that the insurer will not go after a specific party to recover what it paid. Construction and property contracts often require one from vendors, so a vendor's insurer cannot sue the general contractor or owner after paying a claim. To verify it, check the endorsement, not only the SUBR WVD box on the certificate.
What subrogation is
When an insurer pays a claim, it generally gains the right to step into the insured's shoes and recover that money from whoever caused the loss. That right is called subrogation. For example, if a subcontractor's insurer pays for damage and believes the general contractor was partly at fault, the insurer may try to recover from the general contractor.
What a waiver does
A waiver of subrogation gives up that right against a named party. The insurer pays its insured and does not pursue the waived party. A contract that requires the waiver is moving the risk into the insurance and away from lawsuits between the parties. It is common for the waiver to apply only to losses the insurance covers.
Why contracts require it
Owners and general contractors ask for waivers so that one party's insurer does not sue them over a loss on their own project. Waivers are most often requested on:
- General liability. So the vendor's GL insurer does not pursue the party named in the contract.
- Automobile liability. Where vehicles are used on the job.
- Workers' compensation. Without a waiver, a workers' comp insurer that pays an injured worker may seek recovery from a third party. Contracts often require the waiver so the general contractor or owner is not targeted.
Which policies need a waiver, and in favor of whom, is set by the contract. Some states restrict or shape these clauses in construction contracts, so confirm with an attorney if it matters.
How it is added: blanket or scheduled
There are two common ways:
- Blanket by written contract. The endorsement applies automatically to any party the vendor agreed in a written contract to waive against. It is convenient. It depends on the contract requiring the waiver, and it does not list your name.
- Scheduled. The endorsement names the specific party. It is easier to confirm, and the agent may need to issue a new one for each new party.
Wording varies by carrier. Workers' comp waivers in particular are often state specific, and some states use particular forms. Ask the agent which endorsement applies.
The SUBR WVD box on the ACORD 25
The ACORD 25 has a column headed SUBR WVD with a Y or N for each policy. A Y says the agent believes a waiver applies. The form itself notes that if subrogation is waived, certain policies may require an endorsement, and that a statement on the certificate does not give the holder rights in place of that endorsement. Also look at the description of operations, where agents often write the waiver language. See how to read an ACORD 25.
Cost
Some carriers add a charge for a waiver of subrogation, often more for scheduled waivers. Others include a blanket waiver at no charge. Vendors sometimes push back on the cost, so spell out the requirement in the contract. See writing subcontract insurance requirements.
What to verify
- The contract says which policies need the waiver: GL, auto, workers' comp, or all.
- The SUBR WVD box shows Y on each of those policies.
- The description of operations names your entity, or the blanket wording applies by written contract.
- You have asked for a copy of the endorsement if the job is large or the risk is high.
- The waiver stays in force at renewal, since new policy terms need the endorsement again.
Waiver wording is a legal matter. For contract language, ask an attorney or insurance professional. A waiver often appears alongside additional insured status and primary and non-contributory wording in the same requirement list.
Check this automatically
In ComplySub you mark which policies require a waiver of subrogation, once, as part of your requirements. Vendors upload a certificate through a link with no account, and ComplySub flags any required policy where the waiver is not shown. It then reminds the vendor and their agent to fix it. It reads the certificate. It cannot confirm the endorsement behind the Y, so request the endorsement where it matters. ComplySub is not legal or insurance advice.
This guide is general information, not legal or insurance advice. Insurance and licensing rules vary by state, carrier, and contract; confirm what applies to you with your insurance professional, attorney, or licensing board.