A Covered Loss Occurs
Property at a construction project is damaged, and an insurance company pays the covered portion of the loss.
Contractor insurance learning center
Waiver of Subrogation for Contractors
Construction contracts frequently require contractors and subcontractors to provide a waiver of subrogation in favor of a project owner, general contractor, or another party.
A waiver affects an insurance company’s potential recovery rights after a covered loss. It is separate from additional insured status and must be supported by the applicable policy.
Understanding subrogation
Insurance companies may seek recovery after paying a loss.
After paying a covered claim, an insurance company may have the right to pursue another person or organization that allegedly caused or contributed to the loss. That recovery process is commonly called subrogation.
For example, if an insurer pays for covered property damage allegedly caused by another contractor, the insurer may seek reimbursement from that contractor or its insurance company.
A waiver of subrogation may restrict the insurer from pursuing a specified person or organization. The extent of that restriction depends on the policy, endorsement, contract, coverage, and circumstances.
A waiver does not prevent every claim or lawsuit.
It addresses particular recovery rights under the applicable insurance
policy and should not be treated as a general release of liability.
A basic example
How a waiver may affect a construction loss
The following simplified example illustrates the general concept. Actual claims depend on the contract, policies, endorsements, facts, and applicable law.
Another Party May Be Responsible
The evidence suggests that a contractor, subcontractor, owner, or another party may have caused or contributed to the damage.
The Insurer Reviews Recovery Rights
Without an applicable waiver, the insurer may pursue recovery. With a valid waiver, recovery against the protected party may be restricted.
Why construction contracts require waivers
Project participants often attempt to allocate risk in advance.
Owners and general contractors may require waivers to reduce the possibility that an insurer will pursue them after paying a loss connected with the project.
Project Owners
An owner may require contractors and subcontractors to waive recovery rights in favor of the owner for specified project exposures.
General Contractors
General contractors may require waivers from subcontractors as part of a broader contractual risk-transfer program.
Landlords
Commercial leases and construction agreements may require tenants or contractors to provide waivers in favor of a property owner.
Municipalities
Public entities may request waivers in connection with permits, right-of-way work, public projects, or facility use.
Separate insurance requirements
A waiver is not the same as additional insured status.
Additional insured status may provide a specified person or organization with certain protection under another party’s insurance policy.
A waiver of subrogation addresses the insurer’s ability to pursue recovery from a specified party after paying a covered loss. It does not, by itself, make that party an insured under the policy.
Construction contracts frequently require both provisions because they perform different functions. Each requirement must be supported by the applicable policy and endorsement.
- Additional insured status concerns policy protection
- A waiver concerns recovery rights after a loss
- Neither is created solely by a certificate
- Each may require a separate endorsement
- Each remains subject to policy terms
A blanket waiver endorsement may apply to qualifying persons or organizations when the named insured agrees to provide the waiver in a written contract.
The endorsement may require the written agreement to be executed before the work begins or before the loss occurs. It may also limit protection to parties for whom the contractor performs work.
Blanket wording should not be interpreted as an unrestricted waiver in favor of anyone requesting a certificate. Every condition in the endorsement must still be satisfied.
Blanket waivers
A written contract may activate the endorsement.
- Review the exact endorsement language
- Confirm a written contract exists
- Confirm the agreement was signed on time
- Identify the protected party
- Confirm the party qualifies under the endorsement
- Retain the contract with project records
Scheduled waivers
Some policies require the protected party to be specifically named.
A scheduled waiver endorsement identifies a particular person, organization, or project. The insurance company may need to review and approve the request before issuing the endorsement.
The carrier may request the contract, project description, relationship between the parties, location, payroll, job value, or other underwriting information.
Additional premium may apply. Processing time varies, so scheduled waiver requirements should be submitted before work begins.
Do not wait until the certificate deadline.
A scheduled waiver may require carrier approval and cannot always be
added immediately.
Policies that may be affected
Waiver requirements must be reviewed separately for each coverage.
A waiver shown under one policy does not automatically apply to every policy carried by the contractor.
General Liability
A contract may require waiver wording in favor of an owner, general contractor, landlord, or other project participant.
Workers Compensation
A workers compensation waiver may restrict recovery against a scheduled or qualifying party, subject to state rules and policy terms.
Commercial Auto
Some contracts request an auto liability waiver, but availability and policy treatment vary by insurance company.
Property & Inland Marine
Waiver provisions may affect builders risk, installation floater, equipment, and other property-related insurance.
Workers compensation
Workers compensation waivers require special attention.
When a workers compensation insurer pays benefits for an employee’s work-related injury, the insurer may have recovery rights against a third party that allegedly caused the injury.
A workers compensation waiver of subrogation may restrict recovery against a specified or qualifying party. Availability, pricing, and endorsement requirements vary by insurance company and applicable rules.
Some carriers charge based on the payroll associated with a scheduled project or protected party. Others may offer a blanket waiver subject to a minimum or percentage-based charge.
The waiver does not replace workers compensation coverage, prevent an employee from receiving eligible benefits, or make the protected party an insured under the workers compensation policy.
Explore contractor workers compensationA certificate of insurance may include an indicator showing that a waiver applies or state that waiver wording is included when required by written contract.
That notation does not create the waiver. It can only summarize the protection provided by the applicable policy or endorsement.
A contract, certificate request, or description of operations cannot force an insurance policy to provide wording that the carrier has not issued.
Certificates of insurance
The certificate confirms but does not create the waiver.
- The policy must support the waiver
- The protected party must qualify
- Written-contract conditions must be satisfied
- The correct coverage must be identified
- Carrier approval may be necessary
- Supporting endorsements may be requested
Before signing a contract
Review every waiver requirement before agreeing to it.
Insurance requirements can differ from the protection currently provided by your policies.
Identify the Required Policies
Determine whether the contract requires waivers on general liability, workers compensation, commercial auto, property, builders risk, or another policy.
Identify Every Protected Party
Owners, general contractors, lenders, landlords, architects, municipalities, and affiliated entities may all be listed.
Confirm Blanket Eligibility
Review whether each party qualifies under an existing blanket endorsement and whether a timely written contract is required.
Request Scheduled Endorsements Early
Scheduled requests may require underwriting, payroll information, project details, carrier approval, and additional premium.
Save the Written Agreement
Retain executed contracts with certificates and endorsements so the requirement can be documented after a claim or audit.
Seek Legal Advice
Insurance professionals can explain policy options, but qualified legal counsel should interpret contractual obligations and waivers.
Common mistakes
Avoid assumptions that can delay a project.
Assuming It Is Included
Not every contractor policy includes blanket waiver wording for every coverage.
Sending Only a Holder Name
The agency needs the actual insurance requirements, project, parties, and policies affected.
Requesting It After a Loss
Coverage and endorsements generally cannot be backdated to change a known loss.
Confusing It With Additional Insured
These are separate provisions and may require different policy endorsements.
Submitting a waiver request
What to send your insurance agency
- Your business name and policy information
- Complete name of the protected party
- Project name, number, and location
- Complete written insurance requirements
- Relevant insurance section of the contract
- Policies requiring the waiver
- Blanket or scheduled requirement
- Project payroll when requested
- Project value and description
- Start and completion dates
- Certificate delivery contact
- Date the documentation is needed
Providing the complete requirement allows the agency to compare it with the policies and determine whether an existing blanket provision applies or a scheduled endorsement is needed.
Submit a certificate requestContinue learning
Understand the requirements behind contractor certificates.
Frequently asked questions
Waivers of subrogation
Actual application depends on the policy, endorsement, written contract, protected party, coverage, and circumstances.
It is a policy provision or endorsement that may restrict an insurer’s right to recover from a specified party after paying a covered loss.
No. Additional insured status concerns specified protection under the policy. A waiver concerns an insurer’s recovery rights after a loss. They are separate requirements.
No. A certificate may indicate that a waiver applies when the policy supports it, but the certificate cannot create or expand the waiver.
A blanket waiver may apply to qualifying parties when required by a written contract. Every condition in the endorsement must be satisfied.
It may. Cost depends on the insurance company, policy, coverage, blanket or scheduled structure, project, payroll or exposure, and protected parties.
Carrier approval and policy conditions determine whether it can be added. It generally cannot be backdated to change a known loss, and blanket wording may require a written contract executed before work or loss.
Waivers may be available under general liability, workers compensation, commercial auto, property, builders risk, inland marine, and other policies. Each coverage must be reviewed separately.
Review the requirement before work begins
Does your contract require a waiver of subrogation?
Send Ford Agency the complete insurance requirements, project details, and protected-party information. We can review whether your policies support the request or require a change.