Quite often when you are negotiating a contract for work with a prospective client, under the insurance (or indemnity) section of contract, you will find a requirement for a “Waiver of Subrogation”.  It is very important to discuss this with your broker as this clause may be deemed contrary to the insurance contract by your Insurer.

When your client(s) request a waiver of subrogation they are asking your insurance company to pay losses for which they or their employee may be negligent. In essence, your client is requesting coverage for their operations under your insurance policy.  If an insurance company pays out defense costs  and damages where you have been named in a loss suit and it has been determined that you have done nothing wrong, then the insurance company should be able to recoup these payments from the negligent party and their Insurance Company.  To deny your insurance company the ability to do this could be very costly to your Insurer which in turn could be more costly to you.

We, at Collis Insurance, believe that the best course of action is to have the waiver of Subrogation clause removed entirely before you sign the contract.  This is the simplest and most equitable solution for all parties concerned.

In order to do business with your clients and protect them in the event that they are named in a lawsuit with you, your client can usually be added as an additional insured on your Commercial General Liability policy.  This is another common requirement seen on contracts.  The intention of the Additional Insured clause is to pay defense costs on behalf of your client if it is determined that it was your company’s[1] negligence that caused the loss and they were found to be an innocent party.

[1] Your company means you and your employees – please refer to the definition of an insured in your policy wording for a complete description

As Always “Collis” with all your business insurance needs!

Andrea & Staff

[1] Your company means you and your employees – please refer to the definition of an insured in the wording for a complete description

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