Waiver of subrogation, explained for general contractors

A waiver of subrogation stops a subcontractor's insurer from suing you to recover what it paid on a claim. You ask for it in the subcontract, and the sub's insurer has to add it to the policy by endorsement. The checkbox on the certificate is the agent saying it's there; the endorsement is what makes it so.

This is general information, not legal or insurance advice.

What subrogation is

When an insurer pays a claim for its policyholder, it can step into the policyholder's shoes and pursue whoever caused the loss. The insurer pays, then goes after the party at fault.

On a construction site that turns into insurers suing project partners. A sub's work causes water damage, one party's insurer pays, and then it sues another party on the job to recover. Everyone was insured, and the loss still ends up in a dispute among the general contractor, the subs and the owner.

What the waiver does

The insured agrees in advance that its insurer won't pursue certain parties after paying a claim. When a sub's policy carries a waiver in favor of the general contractor, the sub's insurer gives up its right to come after you for a claim it paid.

Two pieces have to line up:

• The subcontract requires the sub to waive subrogation in your favor, and often the owner's.
• The policy carries a waiver endorsement, so the insurer is bound. A promise in the subcontract without the endorsement may not bind the insurer at all.

The common forms are ISO's CG 24 04 for general liability and NCCI's WC 00 03 13 for workers' comp. Auto and umbrella policies have their own.

Why GCs require it from subs

• It keeps covered losses with the insurers, instead of turning project partners into each other's defendants.
• It keeps you from being the target of a recovery action by a sub's insurer.
• Owner contracts often require it to flow down. The AIA A201 general conditions, for one, include waivers of subrogation, and the general contractor passes the requirement on to subs so the whole chain matches.
• It works alongside additional insured status and indemnity. None of the three covers every case, which is why subcontracts usually ask for all of them.

How to confirm it's on the policy

1. Read your subcontract first. Know which coverages need a waiver (general liability, workers' comp, auto, umbrella) and in whose favor.
2. Check the certificate's SUBR WVD column for each policy, and the description box for wording about the waiver.
3. Ask for the endorsement for each coverage. The endorsement binds the insurer; the certificate doesn't.
4. Check whose favor it runs in. It should name you (and the owner, if required), or be a blanket waiver that applies where a written contract requires it.
5. Match it line by line. It's easy to have the waiver on general liability and not on workers' comp, or the reverse.
6. Check the dates. The endorsement has to be in force for as long as the sub works for you.
7. Read the conditions. Some waivers apply only where a written contract signed before the loss requires them, so have the subcontract signed before work starts.
8. Check again at renewal. A new policy needs its own endorsement.

If a coverage is missing its endorsement, or the certificate claims a waiver the insurer can't produce, treat it as open and settle it before the sub mobilizes.

Common mistakes

• Trusting the checkbox. The certificate summarizes; the endorsement controls.
• Starting work before the subcontract is signed. Waivers tied to a written contract may not apply to a loss that came first.
• Forgetting workers' comp. Ask for the workers' comp waiver as specifically as the general liability one.
• Letting it lapse at renewal. A waiver in force at kickoff doesn't help if the renewed policy dropped it.

Keeping track across every sub

Understanding the waiver is the easy part. Tracking it for every sub, across several coverages and renewal dates, is where it slips. TradeGuard tracks each sub's certificates and expiry dates and asks for renewals before they arrive. It doesn't read endorsement forms, so confirming the waiver endorsement is still your step.