Waivers of Subrogation

1
Waivers of Subrogation Additional Insureds

• Presented by Monica McNally
• April 3, 2006

2
What is a Waiver?

• Agreement not to subrogate
• Eliminates ability to assign negligence to
  responsible party
• Eliminates ability for your insurance carrier to
  recover paid
• Knowingly allocates risk to a specific party who
  agrees to assume risk regardless of fault

3
Dos and Donts

• Do have your insurance agent and/or attorney
  review language before you sign
• Do give your insurance agent copies of contracts
• Do try to obtain mutual waivers
• Do try to limit to extent permitted by insurance
  policy
• Dont sign Waiver after a loss
• Dont agree to a waiver that is unreasonable

4
Common Instances Involving Waivers

1. Lease Agreements
2. Sub-Contractors you hire
3. Municipalities
4. Large customers (i.e. Fortune 500 accounts)

5
Claims Examples

• Lease contains waiver
• You suffer water damage caused by poor
  maintenance of landlord. Your property carrier
  pays damages. Carrier cannot recoup paid for
  loss even though due to negligence of others
• Employee collects WC for accident occurring on a
  customers premises
• Employee sues customer and wins
• Waiver prevents carrier from recovering from
  customer
• Employee collects 2X
• If 3rd party (i.e. Customer is actually
  negligent) you end up paying the cost in your
  Experience Modification

6
Additional Insureds

• Provides defense and indemnity
• Know whether coverage is excess or primary
• You share your limits
• Can cover even if Additional Insured is negligent
• Higher ultimate insurance cost to you

7
What Can You Do?

• Negotiate it out of contract terms
• Refuse to enter into contract
• Do not take request lightly

8
Example of a Current Claim

• Reserve 500,000
• Our Insured contracted with a 3rd party to
  collect their scrap
• Claimant was a truck driver independent
  contractor hauling for insured
• 3rd party employees actually loaded scrap into
  truck
• Disagreement over who directed loading claimant
  or 3rd party who had control driver or fork
  lift operator
• Claimant severely injured when pipe fell off
  fork lift and then off truck primarily to face
• Our Insured not named as party to suit