Waiver of Subrogation: What It Is, Why Contracts Require It, and What It Costs

A waiver of subrogation is your insurer's agreement that, after it pays your claim, it will not turn around and sue the other party to your contract to recover the money. Subrogation is the right an insurer acquires, by the policy's terms or by law, once it has paid a loss: it steps into your shoes and pursues whoever caused the damage.^[1] The waiver switches that right off for one named party, or for anyone you have a written contract with, and IRMI describes it as "an acknowledgment by an insurer that it has no right to subrogate against a liable third party."^[2] Owners and general contractors require it because they do not want to be paid a claim through your policy on Monday and be sued by your carrier on Tuesday.

You deliver the waiver through an endorsement on each policy the contract names, most often the CG 24 04 on your general liability policy and the WC 00 03 13 on your workers' compensation policy. If you are bidding work that asks for one and your current policy does not include it, request a general liability quote that builds the waiver in so the certificate is right the first time.

Why do owners and general contractors require a waiver?

Picture a subcontractor's employee injured on a job site. The subcontractor's workers' compensation carrier pays the medical bills and wage benefits. Without a waiver, that carrier has a right to recover what it paid from anyone whose negligence contributed to the injury, and the general contractor controlling the site is the obvious target. A waiver of subrogation in favor of the GC removes that recovery route, so the loss stays with the policy that was bought to absorb it.

The same logic runs through general liability and property claims. The party higher up the contract chain has already priced the project on the assumption that each trade's insurance is the first and last stop for that trade's losses. A waiver is how they make that assumption hold. IRMI puts the practical point plainly: the other contracting party wants "proof - in the form of a waiver of subrogation from the insurer," not just a waiver clause between the two businesses.^[2]

The waiver usually travels with two other requirements: additional insured status and primary and noncontributory wording. Together they make the lower-tier contractor's policy respond first, protect the upper-tier party directly, and stop the lower-tier carrier from clawing the money back.^[4]

Which endorsement delivers the waiver on each policy?

Each policy line has its own waiver endorsement, and a certificate of insurance should show the right one for each line the contract names. Our certificate of insurance guide covers how the waiver appears on the ACORD 25.

Note two limits that trip up certificate reviews. First, the GL waiver is tied to your operations or work for the scheduled party; it does not waive recovery for unrelated claims. Second, the endorsement only matters where the insurer would otherwise have a subrogation right. If the other party caused a loss that your policy never pays, there is nothing to waive.

For a deeper look at the workers' comp version, including why some contractors worry about their experience mod, read the waiver of subrogation glossary entry and our experience mod guide.

Blanket or scheduled: which should you carry?

The blanket version has a condition buried in it: the waiver applies only when a written contract requires it and, on many carrier forms, only when that contract was executed before the loss. A handshake agreement or a purchase order signed after the incident does not trigger a blanket waiver. Keep signed contracts on file with the certificate you issued for them.

How much does a waiver of subrogation cost?

There is no market-wide price. The charge depends on the carrier, the policy line and whether the waiver is blanket or scheduled, and some programs bundle it at no additional charge. For example, one excess and surplus lines contractors program published by Blitz Insurance advertises an additional insured bundle of blanket additional insured, primary and noncontributory, and waiver of subrogation at no charge.^[5] On workers' compensation, carriers commonly rate the waiver as a percentage of the premium for the work performed for the party being waived, but the percentage and any minimum charge are set by each carrier's filed rules, so treat any figure you see online as that carrier's number rather than a rule.

The larger cost is indirect. When your carrier cannot recover a loss from the party who caused it, that loss sits fully on your record and can affect renewal pricing and, for workers' comp, your experience modification rate. That is a reason to price the waiver into your bid, not a reason to refuse it; the contract requirement is usually non-negotiable.

How does California law treat the waiver requirement?

California's construction anti-indemnity statutes restrict how much liability one party can shift to another by contract. Civil Code section 2782 voids construction-contract clauses that indemnify a party for its own sole negligence or willful misconduct, and later amendments limit indemnity for a public agency's or private owner's active negligence.^[6] Section 2782.05 does the same for subcontractor-to-general-contractor indemnity on contracts entered into on or after January 1, 2013.^[3]

Those statutes are about indemnity, not insurance. Section 2782.05 lists exceptions, and one of them preserves "provisions in a construction contract that require the promisor to purchase or maintain insurance," including additional insured endorsements for ongoing and completed operations.^[3] A contract's requirement that you carry a waiver of subrogation sits on that insurance side of the line, which is why California contractors still see the requirement on nearly every subcontract even though the indemnity clauses beside it have been narrowed. IRMI notes that in some states anti-indemnity laws reach insurance requirements too, so a contractor working across state lines should check each state rather than assume the California treatment travels.^[7] Our hold harmless agreement guide walks through the indemnity side in detail.

Contract checklist before you sign

1. Find every waiver requirement in the contract

   Search the insurance exhibit and the indemnity article. Note which policies the waiver applies to (GL, workers' comp, auto, umbrella, property) and in whose favor (owner, GC, lender, their officers and agents).

2. Match each requirement to an endorsement

   Confirm your GL policy carries the CG 24 04 or a carrier equivalent, your workers' comp policy carries the WC 00 03 13, and your auto policy carries its waiver form. Ask your broker for the endorsement copies, not only the certificate.

3. Prefer a blanket schedule

   If you sign more than a couple of contracts a year, a blanket waiver tied to written contracts removes the per-project scramble. Confirm whether the blanket wording requires the contract to be signed before the loss.

4. Check the other party's waiver runs both ways when it should

   On property and builders risk policies, mutual waivers between owner and contractor are common. If the contract promises a mutual waiver, make sure the owner's policy has it too.

5. Keep the paper trail

   File the signed contract, the certificate you issued and the endorsement together. A blanket waiver is only as good as your ability to prove the written contract existed when the loss happened.

If your renewal is coming up, or a contract just landed with an insurance exhibit you have not seen before, start a general liability quote and include the contract; we build the waiver, additional insured and primary wording into the quote instead of adding them after binding. You can also read our general liability insurance overview for what the base policy does before endorsements.

This guide is for educational purposes and summarizes standard policy forms, public sources and California statutes. Your policy's specific terms, conditions, and endorsements control, and contract enforceability depends on the wording and the facts. Talk to a licensed broker and, for contract questions, an attorney about your actual exposures.

The Bottom Line

A waiver of subrogation is an insurer's promise not to recover a paid loss from the party your contract protects. It is delivered by endorsement, most commonly the CG 24 04 on general liability and the WC 00 03 13 on workers' compensation, and a blanket schedule keeps you from re-papering every project. California's anti-indemnity statutes narrow indemnity clauses but leave insurance requirements standing, so expect the waiver on every subcontract, price it into the bid, and make sure the endorsement, not just the contract sentence, is on the policy before work starts.