Waiver of Subrogation
An endorsement where the insurer waives its right to seek recovery from a third party that caused a loss the insurer paid for.
What It Is
A Waiver of Subrogation is an endorsement to an insurance policy in which the insurer agrees to waive its right of subrogation against a specified party. Subrogation is the insurer's right, after paying a claim, to step into the shoes of the insured and seek recovery from the party that caused the loss. By waiving this right, the insurer agrees not to pursue the third party, even if that party was responsible for the loss.
Waiver of subrogation endorsements are available on virtually all commercial lines — CGL (CG 24 04), commercial property, workers compensation, and auto. Each line requires a separate endorsement. The waiver can be specific (naming a particular party) or blanket (applying to all parties the insured is required by contract to waive against).
Contracts commonly require waiver of subrogation to prevent the insured's carrier from suing the other contracting party after paying a claim. This is a standard risk transfer provision in construction contracts, commercial leases, and service agreements.
Why It Matters for Brokers
Waiver of subrogation is one of the "big three" contract requirements alongside additional insured and primary and noncontributory. Failing to secure the waiver endorsement means the insured's carrier retains the right to sue the contract counterparty — which defeats the purpose of the contractual risk allocation. For brokers, verifying that waiver of subrogation endorsements are in place across all required lines is essential for contract compliance.
Real-World Example
A tenant's lease requires a waiver of subrogation on both the CGL and commercial property policies. The tenant's sprinkler system malfunctions, causing $200,000 in water damage to the landlord's building. The landlord's property carrier pays the claim and then seeks to subrogate against the tenant. If the tenant's CGL policy has a waiver of subrogation endorsement naming the landlord, the tenant's CGL carrier cannot pursue the landlord — and the landlord's carrier cannot subrogate against the tenant because the lease's waiver of subrogation clause prevents it. Without these endorsements, the landlord and tenant could be drawn into adversarial litigation despite their contractual agreement.
Common Mistakes
- 1Adding a waiver of subrogation to the CGL but forgetting to add it to the workers compensation and property policies when the contract requires it on all lines.
- 2Issuing a certificate showing waiver of subrogation without verifying that the endorsement has actually been added to the policy.
- 3Not understanding that a waiver of subrogation costs additional premium on some lines (especially workers comp) and failing to disclose this cost to the client.
How brokerageaudit.com Handles This
Policy Checker scans every policy for waiver of subrogation endorsements and identifies whether they are blanket or specific. It cross-references waiver requirements across all lines (CGL, property, workers comp, auto) to ensure complete compliance. COI Manager prevents the waiver of subrogation box from being checked on certificates unless a verified endorsement exists on the policy.