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Contractor’s Guide to Waiver of Subrogation

Contractor’s Guide to Waiver of Subrogation

For nearly every job and every general contractor, there is a contract in place for subcontractors. As part of that contract, there are insurance requirements. Those insurance requirements usually include a requirement for a waiver of subrogation in favor of the general contractor and/or the project owner. The questions are: what is a waiver of subrogation, and should you give it to them? What is Subrogation? So what, exactly, is subrogation? The term itself translates to “in place of another”. In insurance terms, subrogation is the right of an insurer to attempt to recover money from another party for their involvement in a claim. For example you have full coverage auto insurance and you are involved in an accident for which you are not at fault. Your insurer pays your claim and then turns to the at-fault driver or his insurance company to recover the money paid to you. In contractor’s terms, if a subcontractor’s insurance pays a claim and the general contractor was wholly or partially responsible for the claim, the subcontractor’s insurance carrier may try to recover all or some of the money paid out on the claim. Why You Should Get a Waiver of Subrogation If you are a contractor and you work with subcontractors, it is a good idea to get a waiver of subrogation to protect both your insurance policy and your claims history. Here is how this works: Your policy is protected: Requiring your subcontractors to provide a waiver of subrogation means that if they are sued due to work done by a subcontractor on a job for you, their insurance company cannot...
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...