Waiver of Subrogation and Primary & Non-Contributory Endorsements Explained

If you've ever reviewed a commercial contract — whether it's a subcontract, a lease, a vendor agreement, or a service contract — you've probably seen language requiring you to provide a "waiver of subrogation" and make your insurance "primary and non-contributory." These terms show up in nearly every commercial insurance requirement alongside additional insured status, but most business owners don't fully understand what they mean or why they matter. Both endorsements change how your insurance policy interacts with other parties' policies after a claim, and both exist to protect the party hiring you from financial exposure created by your work. Here's what each one does, when you need them, and how they work in practice.

What Is Subrogation?

Before you can understand a waiver of subrogation, you need to understand subrogation itself. Subrogation is the legal right of an insurance company to pursue a third party that caused a loss to its policyholder. It's how insurers recover money they've paid out on claims when someone else was actually responsible for the damage.

Here's a simple example. You're a subcontractor working on a commercial building project. A fire sprinkler system malfunctions in the section of the building where you were working, causing water damage to the general contractor's equipment. The GC files a claim with their own insurance company, and the carrier pays out $50,000 to cover the damage. Now the GC's insurer investigates and determines that the sprinkler malfunction was caused by your work. Through subrogation, the GC's insurance company can come after you — or more specifically, your insurance company — to recover the $50,000 they paid.

Subrogation exists so that the party who actually caused the loss ultimately bears the financial responsibility, even if another party's insurance paid the claim first. It prevents one insurer from absorbing costs that rightfully belong to another.

What Is a Waiver of Subrogation?

A waiver of subrogation is an endorsement to your insurance policy in which your insurer agrees to give up its right to subrogate against a specific party. In other words, if your insurance company pays a claim, they agree not to go after the named party to recover what they paid — even if that party was partially or fully responsible for the loss.

Going back to the example above: if you had a waiver of subrogation in favor of the general contractor on your policy, and the GC's negligence contributed to the sprinkler malfunction, your insurance company would pay your claim but would not pursue the GC to recover the money. The waiver prevents the recovery action.

Why Do Contracts Require Waivers of Subrogation?

The reason is straightforward. When a general contractor, property owner, or client hires you, they don't want to worry about your insurance company coming after them later to recover claim payments. Even if their actions contributed to an incident, they want the insurance policies involved to absorb the cost without triggering a dispute between insurers that could drag them into litigation.

Waivers of subrogation create a cleaner separation between the parties' insurance programs. Each party's insurance handles its own losses without cross-carrier recovery actions. This reduces friction, avoids lawsuits between business partners, and keeps the focus on getting work done rather than fighting over who owes whom.

Common Situations Requiring a Waiver of Subrogation

• Construction subcontracts. Nearly every GC requires subcontractors to provide a waiver of subrogation in their favor. This prevents the sub's insurer from suing the GC after paying a claim.
• Commercial leases. Landlords frequently require tenants to carry a waiver of subrogation on their property and liability policies. If the tenant's property is damaged and the landlord was partly at fault (say, due to a building maintenance issue), the tenant's insurer can't pursue the landlord.
• Service agreements. Clients hiring service providers — janitorial companies, IT firms, consultants — often require waivers of subrogation to prevent the provider's insurer from pursuing recovery.
• Vendor and supplier contracts. Large retailers and distributors sometimes require vendors to waive subrogation rights as a condition of doing business.

How a Waiver of Subrogation Works on Your Policy

A waiver of subrogation is added to your policy through an endorsement. The endorsement can be either scheduled (naming specific parties) or blanket (applying to any party you're contractually required to waive subrogation for).

A blanket waiver of subrogation is the more practical option for businesses that regularly enter into contracts with this requirement. With a blanket waiver, any party that requires a waiver through a written contract is automatically covered — you don't need to request a separate endorsement for each one.

What Does a Waiver of Subrogation Cost?

Waivers of subrogation are typically inexpensive. Scheduled waivers often cost $25 to $50 per endorsement. Blanket waivers are usually included in the base premium or available for a small additional charge of $50 to $150 per year. Some carriers include blanket waiver of subrogation as a standard feature on their commercial general liability policies.

The cost is low because the waiver doesn't increase the insurer's exposure to claims — it only limits their ability to recover money after a claim is paid. The insurer is still paying the same claims they would have paid without the waiver. They're just giving up the right to chase recovery from a specific third party.

Important Limitations

A waiver of subrogation must be in place before a loss occurs. You cannot add a waiver retroactively after an incident to prevent subrogation. If a contract requires a waiver and you don't have one on your policy at the time of the loss, the waiver language in the contract alone may not be enough to prevent your insurer from pursuing recovery.

Also, waivers of subrogation apply to the specific coverage line they're endorsed onto. A waiver on your general liability policy doesn't automatically apply to your workers' compensation, commercial auto, or property policy. If a contract requires waivers across multiple coverage lines, each policy needs its own endorsement.

What Does Primary and Non-Contributory Mean?

Primary and non-contributory is an endorsement that changes the order in which insurance policies respond to a claim when multiple policies could apply.

To understand this, you need to know how insurance policies normally interact when more than one policy covers the same loss.

How Insurance Normally Works with Multiple Policies

When two or more insurance policies cover the same claim — which happens frequently when additional insured status is involved — the policies need a method to determine which one pays first and how costs are shared. The default approach for most commercial general liability policies is called "contribution by equal shares" or "contribution by limits." Under these methods, both policies share the cost of the claim, either equally or in proportion to their respective limits.

For example: you're a subcontractor, and the GC is listed as additional insured on your GL policy. The GC also has their own GL policy. If a claim arises from your work and the GC is named in the lawsuit, both policies could technically respond — yours because the GC is an additional insured, and the GC's own policy because it covers them directly. Without a primary and non-contributory endorsement, the two insurers would share the claim costs.

What Primary and Non-Contributory Changes

A primary and non-contributory endorsement states that your policy will pay first (primary) and will not seek contribution from the additional insured's own policy (non-contributory). This means your insurance absorbs the full cost of the claim — up to your policy limits — before the additional insured's own policy is triggered.

In the example above, with a primary and non-contributory endorsement on your policy, your GL policy would pay the full claim for the GC. The GC's own policy would only come into play if the claim exceeded your policy limits.

Why Do Contracts Require Primary and Non-Contributory?

From the GC's or property owner's perspective, the logic is simple. They hired you to do the work. The risk was created by your operations. So your insurance should pay first, and their insurance should not have to contribute.

Without primary and non-contributory language, the GC's insurer would share the cost of claims arising from your work. That would affect the GC's loss history, potentially increasing their premiums at renewal — even though the claim was caused by your operations, not theirs. Primary and non-contributory endorsements prevent that outcome.

How It Appears on Your Policy

Like waiver of subrogation, primary and non-contributory status is added through a policy endorsement. It can be scheduled (naming specific parties) or blanket (applying to any party required by written contract). The blanket version is again the more practical choice for businesses with multiple contracts.

Many modern commercial GL policies include blanket primary and non-contributory language as a standard provision, automatically applying to any additional insured where required by written contract. Check your policy — you may already have this coverage built in.

What Does Primary and Non-Contributory Cost?

The cost is typically minimal — similar to a waiver of subrogation. Scheduled endorsements run $25 to $50 each. Blanket endorsements are often included in the base premium or available for a small additional charge. Some carriers bundle blanket additional insured, blanket waiver of subrogation, and blanket primary and non-contributory into a single endorsement package.

How These Endorsements Work Together

In practice, waiver of subrogation and primary and non-contributory almost always appear together in contracts, alongside additional insured requirements. Here's how the three work as a package.

Additional insured gives the other party coverage rights under your policy. If a claim arises from your work and they're named in the lawsuit, your policy defends them.

Primary and non-contributory ensures your policy pays first, without seeking contribution from the additional insured's own policy. Their insurance stays clean.

Waiver of subrogation prevents your insurer from later suing the additional insured to recover claim payments, even if the additional insured's own negligence contributed to the loss.

Together, these three endorsements create a comprehensive risk transfer package. The party hiring you gets covered under your policy, your policy pays first without touching theirs, and your insurer can't come back after them later. This is the standard insurance requirement package in commercial construction, property management, and many service industries across Washington State.

What to Watch For in Your Contracts

When reviewing insurance requirements in contracts, pay attention to several details.

Which coverage lines require these endorsements. Most contracts require them on general liability, but some also require them on commercial auto, workers' compensation, or umbrella policies. Make sure your endorsements match what the contract specifies.

Whether the requirement is mutual or one-sided. Some contracts require both parties to provide waivers of subrogation to each other. Others only require the subcontractor or tenant to provide them. Understand your obligations.

Whether your policy can accommodate the requirements. Not all carriers offer every endorsement on every policy. Before signing a contract with specific insurance requirements, verify with your agent that your current policies can be endorsed accordingly.

The timing. These endorsements should be in place before work begins. If your contract requires primary and non-contributory status and a waiver of subrogation, get the endorsements added to your policy before you start the project, not after.

Getting the Right Endorsements

Understanding waiver of subrogation and primary and non-contributory endorsements is important for any business that works under contract — contractors, property managers, service providers, vendors, and consultants. These endorsements are standard in commercial insurance, and having them readily available on your policy makes you easier to do business with.

At SmartInsured, we help Washington businesses set up their policies with the endorsements their contracts require — including blanket additional insured, waiver of subrogation, and primary and non-contributory. If you're not sure whether your current policy includes these provisions, or if you need to add them for an upcoming contract, get in touch with us today and we'll make sure your coverage is contract-ready.