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Let’s say you are a Trade Contractor working on a project and your contract requires that you waive your subrogation rights. If you do not have a Waiver of Subrogation Endorsement on your Insurance Policies, you could very well be in breach of contract with the Owner, General Contractor or Trade Contractor that hired you. In this post, we will explain the process behind a waiver of subrogation.
If someone in your company gets injured or you suffer a property damage loss, the resulting claim would be paid by your insurance. However, without a Waiver of Subrogation Endorsement in your policies, the insurer who paid that loss would then subrogate against the party they deem to be responsible for the loss, in order to recover the payment they made for the loss. In many cases, that would be the Owner, General Contractor, or Trade Contractor that hired you.
How does a waiver of subrogation work?
A Waiver of Subrogation Endorsement allows you to agree to “waive your right” to subrogation, which then prohibits your insurer from seeking reimbursement from the party with whom you executed the waiver. The endorsement stipulates that the waiver must be agreed to in writing prior to any loss. It precludes the insurance company from “standing in your shoes” to collect from the other party responsible for the accident.
The Waiver of Subrogation Clause is standard in construction contracts and protects the Owner, General Contractor or Trade Contractor who hired your company. It is imperative that your insurance policies are structured to properly protect your firm and your contractual obligations as well.
If you still have questions on Waivers of Subrogation or other insurance coverages, you may give TSIB a call today at 201-267-7500!