Waivers of subrogation are an important part of commercial contracts. These waivers are agreements between two parties where one party agrees to waive subrogation rights against the other in the event of a loss.

For affiliates, waivers of subrogation are commonly used when a subcontractor signs a contract with a general contractor (or Habitat affiliate) to work on a project.

Commonly requested in professional and commercial insurance, such as General Liability, Commercial Auto, Property, and Workers’ Compensation policies, these waivers can:

  • Minimize the number of lawsuits that arise from a claim
  • Protect professional relationships
  • Offer the affiliate peace of mind that they won’t be responsible for losses already covered by other entities’ insurance policies
  • Ensure that projects don’t come to a halt while insurance claims are settled

Requiring a subcontractor to provide a waiver of subrogation adds additional protection for your affiliate. Ideally, affiliates will be the party requiring the waiver, not the entity waiving their rights.

Benefits of Waivers of Subrogation for Affiliates

Requesting a waiver of subrogation can be beneficial when working with contractors and subcontractors. Here are two examples of how the process works for Affiliates:

Example #1: General Liability

  • An affiliate is building a new ReStore and has a contract with a general contractor to do the roof work.
  • The contract between the affiliate and general contractor contains a waiver of subrogation clause saying that the general contractor waives the right to subrogate against the affiliate regarding any damage.
  • The general contractor hires a subcontractor with an agreement containing a similar waiver of subrogation provision.
  • During the construction project, the subcontractor is negligent and starts a fire that destroys the building, resulting in a loss of $1 million.
  • The subcontractor’s insurance is responsible for the $1 million loss, without contribution from either the general contractor or the affiliate, because of the waivers of subrogation.

Example #2: Workers’ Compensation

  • An affiliate is working with a subcontractor on a build job.
  • The contract required the subcontractor to agree to a waiver of subrogation on General Liability and Workers’ Compensation policies.
  • When the work begins, one of the subcontractor’s employees is severely injured.
  • Because of the waiver of subrogation, the subcontractor’s Workers’ Compensation insurance provides coverage.
  • The subcontractor, the  subcontractor’s employer or their insurance carrier cannot subrogate against the affiliate saying that the loss was their fault.

If you have any questions on waivers of subrogation, contact the Habitat for Humanity Affiliate Insurance Program team.