What Is a Waiver of Subrogation?

When it comes to protecting your business, Business Insurance is only part of the equation. The fine print of your policies can play just as important a role as the coverage itself. One endorsement that often comes up in contracts and certificate of insurance requests is the Waiver of Subrogation. While it may sound like legal jargon, understanding this provision can help businesses avoid disputes. 

In simple terms, subrogation is your insurance company’s right to seek reimbursement from a third party who caused a loss. For example, if your property is damaged because of a contractor’s negligence, your insurer might pay your claim and then pursue that contractor (or their insurer) to recover the cost.

A Waiver of Subrogation prevents this from happening. By agreeing to the waiver, you’re telling your insurer: “If we pay a claim, we won’t go after the other party, even if they were responsible.”

Why Businesses Use It

• Smooth Business Relationships: In industries like construction, real estate, and professional services, contracts often require a Waiver of Subrogation to reduce finger-pointing and lawsuits between partners.
• Faster Project Flow: With fewer legal disputes, projects can move forward without delays caused by insurance recovery battles.
• Contract Compliance: Many clients or landlords won’t sign agreements unless this endorsement is in place and certificate is provided reflecting it. 

Things to Consider
While Waivers of Subrogation can protect relationships, they also shift some risk back onto your insurance company—and sometimes, onto you. This can:

• Limit your insurer’s ability to recover losses.
• Potentially affect premiums if claims can’t be recovered.
• Require special endorsements on your policy (and sometimes additional costs).

Waivers of Subrogation (WOS) are becoming more common in the business world, and often expected in contracts. Before signing off on a waiver, review it with your insurance agent. If you have questions about this endorsement or any other questions related to Business Insurance, please feel free to contact me. 

Jason Matison
Commercial Insurance Agent
Austin, Texas