Waiver of Subrogation: What You're Giving Up When You Sign It
GL renewals are up. That fact is not new to most contractors at this point. What may be newer is understanding why — and how the same market pressure driving premium increases is also showing up in contract language.
In 2024 there were 135 nuclear verdicts in the United States totaling more than thirty-one billion dollars. General contractors are watching those numbers. One of the ways they are responding is by pushing waiver of subrogation requirements harder into subcontracts and vendor agreements. Understanding what you are signing when you see that clause is no longer optional.
What Is Subrogation?
When your insurance carrier pays a claim on your behalf, they have the right to pursue whoever actually caused that loss to recover what they paid. That is subrogation. Your carrier steps into your shoes and goes after the responsible party.
It is an automatic right built into most standard policies. In a market where carriers are managing rising claims costs, that recovery right matters to them and to how your account is priced over time.
What Does a Waiver Remove?
A waiver of subrogation prevents your carrier from exercising that recovery right. When you sign one, you are agreeing that if a loss occurs and your carrier pays it, they cannot pursue anyone else on the project for reimbursement. The loss stops with them.
That is not inherently wrong. Waivers of subrogation serve a legitimate function on construction projects. But understanding what you are giving up is the starting point for deciding whether the terms are reasonable.
Mutual vs One-Way — The Distinction Most Contractors Miss
The single most important question when reviewing a waiver of subrogation is whether it is mutual or one-way.
A mutual waiver means both parties give up their carrier's subrogation rights against each other. You agree your carrier will not pursue them. They agree their carrier will not pursue you. Symmetric.
A one-way waiver means only you are giving something up. Your carrier cannot pursue them. Their carrier retains the right to come after you.
Most contractors assume mutual. That assumption is worth verifying in the contract language before signing. If the waiver only restricts your carrier and says nothing about the other party's carrier rights, it is one-way.
Scope — Which Lines of Coverage Are Affected
Some waivers apply only to property damage or builders risk. Others extend to general liability. Some require the waiver across all lines simultaneously — GL, workers compensation, and commercial auto.
When a waiver applies across all lines at once, you have removed your carrier's recovery ability on every type of claim that could arise from the project. That is a significantly broader concession than a property-only waiver, and it is worth knowing which one you are signing.
Carrier Consent — A Coverage Question Most Contractors Never Ask
Many standard policies include a condition requiring the policyholder to obtain the carrier's consent before waiving subrogation rights. If you waive without required carrier consent and a related loss occurs, the carrier may have grounds to deny the claim.
This is a coverage gap that can be created before a job even starts — simply by signing a contract clause without checking the policy it affects.
Three Questions Before You Sign
Before signing any waiver of subrogation, ask three things.
First — is this mutual or one-way? The language will tell you. If only your carrier's rights are restricted, it is one-way.
Second — what lines does it apply to? Property only, GL only, or all lines including workers comp and auto?
Third — does your current policy require carrier consent before you waive? Your agent can answer this in a few minutes. Worth asking before you sign, not after a claim.
Send the clause to your agent. Three questions. Five minutes. Significantly easier to address before the contract is executed than after a loss.
If you are reviewing a contract and want to know what you are actually giving up — that is the kind of conversation we have. Reach out.
Disclaimer: This article is for educational purposes only and does not constitute legal, regulatory, or professional insurance advice. Coverage requirements and options vary by state and individual circumstance. Please consult with a licensed insurance professional before making any coverage decisions.
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