A waiver of subrogation in Workers’ Compensation means that an insured’s insurance company
forfeits its right to recover damages from a third party that caused a claim. It’s a way of limiting a
party’s liability with a waiver typically requested in contractual agreements between two or more
parties before they engage in a job.
For example, a general contractor (GC) who oversees the construction of a building has asked his
subcontractors, including a plumber, to include a waiver of subrogation endorsement in their
Workers’ Compensation policies as part of their contractual agreement, limiting the GC’s liability.
While on the job, one of the GC’s workers drops some equipment and fractures the plumber’s foot.
The plumber’s Workers’ Comp insurance carrier pays the medical expenses and wage replacement
related to the injury. The carrier will want to recoup these costs from the GC’s insurance company
since the GC’s worker was responsible for the injury. However, the waiver of subrogation included
in the plumber’s policy precludes the carrier from recouping its costs.
Scheduled or Blanket?
A scheduled waiver endorsement lists a specific entity (third party), like a person or an
organization, that cannot be sued to pay for a claim that they have caused. The insured must notify
the agent each time a third party requests a waiver of subrogation so an endorsement can be
added to the policy. The endorsement includes the name of the third party requesting the waiver,
the specific project/job address, and the project description.
A blanket waiver endorsement doesn’t list a specific party but will apply to any third party that
causes a claim for which the insurance carrier pays. It applies to all jobs in all states (excluding
Texas) requiring the waiver from the named insured.
Both types of waivers are premium-bearing endorsements. The premium for a scheduled waiver is
typically 5% of the premium generated by the payroll associated with the specific job. A blanket
waiver generally is 2% of the manual premium. The additional premium for both types of
endorsements is determined at audit so that charges are accurate.
The policy needs to be reviewed every year to include the appropriate endorsement. For instance, a
broker will review the renewal to determine whether specific jobs on the scheduled endorsement
are ongoing and need to be included, along with which new projects should be added.
Since waivers constitute changes to the policy’s terms and conditions, Prescient National
evaluates each risk and waiver request to determine whether it fits our appetite.
About Prescient National
Prescient National offers Workers’ Compensation insurance solutions to employers based on their
individual needs, risk-taking appetite, and loss history. Solutions include guaranteed cost policies,
small-, midsize-, and large-deductible policies, retrospective rating policies, excess/self-insurance,
and captive options.
