Why Your Insurance Policy Should Include a Waiver of Subrogation

When you’re purchasing a new General Liability insurance policy, you know how important it is to provide a Certificate of Insurance confirming that you are covered in the case of an accident. But you might not be familiar with the waiver of subrogation — another document that you’ll be glad you have if a claim is filed. Here’s what you need to know.

What is subrogation?

Subrogation refers to an insurance carrier’s legal right to pursue a third party that caused an insurance loss to the policyholder. This allows the carrier to seek repayment for the claim amount that they paid to the insured for the loss.

What is an example of subrogation?

Imagine that you are a carpenter, and you are on site at a client’s property to build a shed in their backyard. You are using a table saw to cut rafters for installation when the saw unexpectedly catches fire, damaging the client’s expensive lawn furniture which is positioned nearby.

Your insurance carrier covers the cost of this damage, but in the course of the investigation, it is discovered that the fire was caused by the table saw’s defective motor. Your carrier successfully subrogates against the motor manufacturer and recovers the amount of the claim it had paid to the client on your behalf.

What does it mean to waive subrogation?

A waiver of subrogation is a contractual provision that forfeits the right of subrogation. In other words, the insured waives the right of the insurance carrier to seek compensation for losses from an at-fault third party. A waiver of subrogation is only provided for scheduled Additional Insureds.

Why would you want a waiver of subrogation?

By waiving your right to subrogation, you are communicating to your client that you will not pursue your right to recovery for any damages if they are somehow found partially responsible for a loss.

In addition to the peace of mind this provides, a mutual waiver of subrogation also eliminates the potential for business conflicts between you and your client should a claim be filed, as neither you nor your insurance company can seek a share of any damages paid with this agreement in place. As such, many clients may request that you add a waiver of subrogation to your General Liability insurance policy.

Does Thimble provide a waiver of subrogation?

Yes, every policy that includes Additional Insureds comes with a waiver of subrogation. You can find it in the “My Policies” section of your profile in the mobile app.