Waiver of subrogation explained

Start with subrogation

Subrogation is an insurer's right to recover what it paid out from whoever actually caused the loss. If a subcontractor's employee is injured on your site and the sub's insurer pays the workers' compensation benefits, that insurer may then pursue the party it believes is responsible — which, on a busy job, can be the general contractor — to get the money back.

The logic is simple from the carrier's side: they paid a claim that wasn't really their insured's fault. It's less comfortable from yours, because it means a claim you didn't file can still end with your company defending a lawsuit.

What a waiver of subrogation does

A waiver of subrogation is an agreement — usually written into the contract and reflected in the insurance — that one party's insurer gives up the right to recover from the other party. In a construction setting, the practical effect is that the subcontractor's carrier pays their side of a loss and cannot turn around and sue you for it.

It has to be agreed before the loss. A waiver signed the week after an accident is a very expensive piece of paper.

A worked example

• A mechanical sub's technician is hurt on your site and the injury is traced to a scaffold your crew erected.
• The sub's workers' compensation carrier pays the technician's benefits — say, a six-figure sum.
• Without a waiver, the carrier can sue you to recover what it paid, on the theory your scaffold caused the injury.
• With a waiver in place, the carrier has already given up that recovery right, and the money stays where the contract put it.

Where you should be able to see it

• The subcontract itself, in the insurance clause, naming who the waiver runs in favour of.
• The COI, either in the waiver of subrogation box or spelled out in the additional remarks with the parties named.
• An endorsement on the policy, where the carrier has formally agreed to the waiver. Where the requirement is real, ask for this — a sentence in a remarks field is a broker's summary, not the policy's agreement.

Blanket, scheduled, and the workers' compensation wrinkle

A scheduled waiver names specific parties; a blanket waiver is written broadly enough to cover whoever the contract requires. Broader is better for you as the party asking, and agents sometimes charge a small premium for blanket language — which is exactly the kind of thing worth settling in the subcontract before the job starts.

Waivers involving workers' compensation are the tricky ones. Some states restrict or refuse to enforce them, and others require them to be drafted a particular way or funded through a specific policy provision. If your contracts include workers' compensation waivers, have your counsel confirm the wording for the states you work in — this is not a clause to copy across borders.

How general contractors actually enforce it

Write the requirement once, in the subcontract, and then make the certificate prove it: waiver of subrogation in favour of your company and the owner, endorsement attached. Put the same line in the checklist you send with the document request, so the sub's agent sees it before they issue the certificate rather than after you've rejected one.

Then keep it alive for the life of the job: the waiver only helps if the policy behind it is still in force on the day of the loss, which is why expiry tracking and this check belong in the same workflow.

Frequently asked questions

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