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What is a waiver of subrogation?

A waiver of subrogation stops an insurer from suing you to recover a claim it paid to its own customer. Pick a scenario and switch the waiver on and off to see exactly what changes.

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An electrician employed by your subcontractor falls from a ladder on your job site. Your crew had moved the ladder.

  1. Sub’s workers’ comp insurerPays the electrician’s medical bills and lost wages.
  2. InsurerLooks for someone else who caused the loss — your crew moved the ladder, so that’s you.
  3. Sub’s insurerUses its right of subrogation: it steps into the sub’s shoes and sues you to recover what it paid.
  4. YouYour own liability policy defends the claim. Losses like this can follow you to your next renewal.
Without a waiver: the insurer can try to recover from you.

Most construction contracts require subs to provide a waiver of subrogation in favor of the GC and owner for exactly this reason.

Waiver of subrogation, explained

Subrogation is an insurer’s right to recover money it paid on a claim from whoever caused the loss. When your subcontractor’s insurer pays for an injury or damage, it “steps into the shoes” of its customer and can sue the responsible party — which, on a job site, can be you.

A waiver of subrogation takes that right away for the parties named in the contract. The insurer still pays its customer’s claim; it just can’t turn around and pursue you for it.

Why contracts require it

Construction and service contracts usually decide up front which party’s insurance pays for which kind of loss. Waivers of subrogation make that allocation stick. Without them, a claim that one policy was supposed to absorb can turn into a lawsuit between the project’s parties and their insurers.

Contracts commonly ask subs to provide waivers in favor of the GC and owner on:

  • Workers’ compensation and employers’ liability
  • General liability
  • Commercial auto
  • Umbrella or excess liability

How to check it on a certificate of insurance

  1. Find the policy row on the ACORD 25 (general liability, auto, workers’ comp…).
  2. Look at the SUBR WVD column for that row. “Y” means the agent is indicating a waiver applies.
  3. Check the description of operations for wording that names you or your project.
  4. For high-value contracts, ask for the actual endorsement — the certificate doesn’t change the policy.

Not sure how the rest of the certificate fits together? See the annotated certificate of insurance sample, or check whether you’re an additional insured or just a certificate holder.

Waiver of subrogation vs additional insured

They solve different problems. Additional insured status lets you use your sub’s policy when you’re sued because of their work. A waiver of subrogation stops their insurer from suing you after it pays a claim. Most subcontracts require both.

FAQ

Common questions.

  1. 01

    What is a waiver of subrogation in simple terms?

    It’s an agreement that an insurance company won’t try to recover the money it paid on a claim from a specific third party — usually the other party to a contract. After paying its own customer’s loss, the insurer gives up its right to sue you for it.

  2. 02

    Who benefits from a waiver of subrogation?

    The party the waiver is written in favor of — typically the general contractor, the property owner, or both. Their sub’s or vendor’s insurer can’t pursue them to recover a claim it paid.

  3. 03

    How do I know if a certificate of insurance shows a waiver?

    On an ACORD 25, the SUBR WVD column next to each policy is marked “Y” when the waiver applies. The certificate is informational, so for important contracts also ask for the waiver of subrogation endorsement from the policy.

  4. 04

    Does a waiver of subrogation cost extra?

    Sometimes. Insurers may add a small charge for a specific or blanket waiver endorsement, especially on workers’ compensation policies. Your sub’s agent can tell them.

  5. 05

    Are waivers of subrogation allowed everywhere?

    Not always. Some states limit waivers on workers’ compensation policies, and rules differ by policy type. Confirm with your broker or attorney before relying on one.

More free tools

Free ACORD 25 checker

Upload a COI — AI reads it and tells you if it meets your requirements.

Additional insured vs certificate holder

Four questions to identify documents and coverage terms to confirm with your broker.

Certificate of insurance sample (ACORD 25)

Click any box on an annotated sample certificate to learn what to check.

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These free tools are general information, not legal or insurance advice. Requirements and rules vary by contract, carrier and state — confirm with your broker or attorney.