What is a Waiver of Subrogation in Business Insurance

When it comes to Business Insurance there many endorsements. One that comes up frequently is Waiver of Subrogation (WOS). A Waiver of Subrogation in Business Insurance is a provision where your insurance company agrees not to pursue a third party to recover money after paying a claim on your behalf. 

How it normally works (without a waiver)
Under the principle of subrogation, if your insurer pays for a loss caused by someone else, they can step into your shoes and sue that responsible party to recover the money.

What changes with a waiver of subrogation
When you agree to a waiver:

• Your insurer gives up that right to recover
• Even if another party caused the damage, they won’t be pursued for reimbursement
• The loss essentially stays with your insurance policy

Why businesses use waivers
Waivers are very common in contracts, especially in:

• Construction projects
• Commercial leases
• Vendor or service agreements

They’re used to:

• Reduce lawsuits between partners
• Keep business relationships intact
• Simplify claims handling after a loss

Example
Let’s say:

• A contractor accidentally causes a fire in your building
• Your property insurer pays the claim

Without a waiver:
Your insurer could go after the contractor to recover the payout
With a waiver:
Your insurer cannot pursue the contractor, even if they were at fault

Important considerations

• Endorsement required: Most policies require a formal waiver endorsement
• May increase premium: Insurers take on more risk when they give up recovery rights
• Applies to specific parties: Often limited to those named in a contract

Where you’ll see it
Waivers of subrogation commonly appear in:

• General Liability policies
• Workers’ Compensation policies

Bottom Line
A waiver of subrogation is essentially a risk-sharing and relationship-protection tool. It trades the insurer’s right to recover losses for smoother business dealings and fewer disputes, but it can shift more financial burden onto the insurance policy itself. If you have questions about any other Business Insurance topic, or would like a quote, please feel free to contact me. 

Jason Matison
Commercial Insurance Agent
Austin, Texas