What is a waiver of subrogation?

In this Article:

• Waiver of subrogation explained
• Why is a waiver of subrogation important?
• What does it mean to waive your rights of subrogation?
• How do I obtain a waiver of subrogation?
• When to decline a waiver of subrogation request
• How to get a waiver of subrogation
• Making informed decisions about waivers of subrogation
• Frequently asked questions

A waiver of subrogation is an important clause in insurance policies that can impact your business's liability. Here's everything you need to know to make informed decisions.

A waiver of subrogation is a contractual provision that prevents your insurance company from seeking reimbursement from other parties who share responsibility for a covered loss. Many clients and general contractors require waivers of subrogation in contracts to protect themselves from potential lawsuits after claims. Understanding how waivers work helps you negotiate contracts confidently and avoid unexpected premium increases or coverage gaps that could leave your business exposed.

Waiver of subrogation explained

Subrogation is when your insurance company, after paying a loss, inherits your right to recoup its payment from another party, if that party is also partially responsible for the loss.

📌 For example, suppose you are a marketing consultant, and you and your client are sued for copyright infringement. A judgment is awarded that requires your insurance company to pay in full in order to release you from the claim. A subrogation clause can be helpful if a client was also partially responsible for the loss, as you would have the right to recover the part of the loss that was your client’s fault. 

Since your insurance company paid the full amount of the subrogation claim on your behalf, they now inherit your right to recover that portion of the loss. Your insurance company can seek to recover damages from your client or their insurance company through their right of subrogation. 

📌 Subrogation is the right of your insurance company to recoup part of its loss from another party, so a waiver of subrogation gives up (waives) that right.

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Why is a waiver of subrogation important?  

📌 Subrogation and waivers of subrogation play a critical role in real-world scenarios across various industries. For instance, in construction projects, subcontractors often sign contracts requiring a waiver of subrogation to prevent insurance companies from pursuing other parties involved in a project if an accident occurs.  

Similarly, in healthcare, hospitals might request a waiver from vendors providing medical equipment to ensure claims are resolved without inter-company disputes. Another example is in landlord-tenant relationships, where landlords may require tenants to waive subrogation rights to avoid litigation if a property-related claim arises. Understanding these scenarios helps businesses anticipate the implications of waivers and manage their risks effectively.

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What does it mean to waive your rights of subrogation?

This relinquishes your right of subrogation. Clients may want your business to waive your right of subrogation so they will not be held liable for damages if they are partially responsible for a loss. When you waive your right of subrogation, your business (and your insurance company) is prevented from seeking a share of any damages paid. This waiver of subrogation may eliminate potential conflicts between you and your client.  

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How do I obtain a waiver of subrogation?

🎯 It can typically be accommodated on Hiscox policies. However, it increases exposure, since you are giving up your right to recover any losses from your client(s). Therefore, your premium may increase with a waiver of subrogation. You’ll want to factor in any premium increase when determining the price you charge your client for your work. 

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When to decline a waiver of subrogation request

Not every waiver of subrogation request makes business sense. Decline waivers when the premium increase exceeds your profit margin on the contract, when the client has a history of negligence claims, or when the work involves unusually high risks. You can also negotiate alternatives like limiting the waiver to specific project phases, capping the waiver amount, or requiring the client to carry higher liability limits themselves. Some clients will accept "no" if you explain the cost impact professionally. Remember that waiving subrogation is not mandatory. It is a negotiable contract term that should align with your risk tolerance and business goals. 

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How to get a waiver of subrogation

Need a waiver of subrogation? Our licensed agents can guide you through the process and help safeguard your business.   

You can request a waiver of subrogation for your policy online, or call us at 1-888-202-3007, Mon-Fri, 7am – 10pm ET and speak to a licensed agent.   

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Making informed decisions about waivers of subrogation

Waivers of subrogation are common contract requirements that require careful consideration before accepting. While they can help you win contracts and maintain positive client relationships, they also increase your insurance costs and shift financial risk to your business. Evaluate each waiver request individually, considering the contract value, premium increase, and your client's reliability. When in doubt, consult with a licensed Hiscox agent who can explain the specific cost and coverage implications for your situation. By understanding how waivers work and when they make business sense, you can negotiate contracts confidently while protecting your bottom line and maintaining adequate insurance protection.

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Frequently asked questions

How much does a waiver of subrogation cost?  

The cost varies based on your policy type, coverage limits, and risk exposure, but premium increases typically range from 2% to 10% of your base premium. For a general liability policy costing $1,200 annually, adding a blanket waiver of subrogation might increase your premium by $50-$120 per year. One-time, project-specific waivers usually cost less than blanket waivers that apply to all clients. Before agreeing to a waiver, request a quote from your insurance agent so you can factor the cost into your contract pricing and ensure the project remains profitable.

What's the difference between a blanket waiver and a project-specific waiver?  

A blanket waiver of subrogation automatically applies to all clients and projects covered under your policy, eliminating the need to request individual endorsements for each contract. This simplifies administration but costs more because it applies universally. A project-specific waiver applies only to named clients or contracts, offering flexibility to waive subrogation selectively for important clients while maintaining recovery rights elsewhere. Most businesses choose project-specific waivers to control costs, requesting blanket waivers only when they consistently work with clients who require them.

Can my insurance company refuse to add a waiver of subrogation?  

Yes, insurance companies can decline waiver requests if they determine the increased risk exceeds acceptable limits. Insurers typically refuse waivers for extremely high-risk projects, clients with poor safety records, or situations where the waiver would eliminate most of the insurer's ability to control claim costs. If Hiscox declines your waiver request, discuss alternatives with our licensed agents like increasing your coverage limits, adjusting your deductible, or exploring whether the client would accept different contract terms. You can also shop other insurers, though refusal by one carrier often signals genuine risk concerns.

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