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Understanding Primary & Noncontributory and Waiver of Subrogation

Understanding Primary & Noncontributory and Waiver of Subrogation

When a business receives a contract with insurance information included or a request for a certificate of insurance, it probably seems like it is written in a different language. The easiest thing to do is send it to the person that speaks that language: your insurance broker. Have you ever wondered what some of those words on the request mean, and why you sometimes have to pay extra (up to $1,000 or more) when a certificate request passes your broker’s desk?  We’re going to examine two increasingly common requests, primary & noncontributory wording and waiver of subrogation, to find out more. The Terms Defined Despite the fact that there are two separate phrases, there are actually three definitions at work here, and combined they can take a toll on your insurance coverage.  So what do they mean? Primary & noncontributory is a phrase that usually appears together and refers to any type of liability insurance (Commercial General Liability, Automobile Liability, Workers Compensation and others).  The “primary” portion means that the insurance policy to which the word applies will be the primary or first policy to pay out in the event of a claim. The “noncontributory” portion means the insurance policy to which the word applies will be the only policy available to pay the claim. This policy will not require any other policy available to contribute to payment of the claim. To define a waiver of subrogation you must first understand the term “subrogation”. Subrogation is the right of one party to substitute for another. In the world of insurance, if a claim is paid out by the insurance...