Three phrases show up in almost every commercial contract I read, and most business owners have never had them explained.
What is a waiver of subrogation?
Subrogation is your insurer's right to recover from whoever caused a loss. If a contractor floods your premises and your carrier pays the claim, your carrier can pursue the contractor.
A waiver of subrogation gives that right away in advance for a named party. It is common in leases and construction contracts, because the counterparty does not want to be sued by your insurer for something they are already indemnifying you for. It has to be endorsed onto the policy, and some carriers charge for it.
What does primary and non-contributory mean?
It means your policy pays first and does not ask the other party's insurer to share. Without it, two carriers can spend months arguing about the order of payment while the claim sits open.
Counterparties ask for it because it removes ambiguity. It is a reasonable request in most tenancy and vendor relationships, and it is usually straightforward to endorse.
Are these expensive?
Usually not, relative to the deal they unlock. The real cost of these clauses is not premium — it is time. They have to be requested, endorsed and then reflected accurately on the certificate. If we find out about them on the day the contract is signed, everyone is rushing.
There is also a claims consequence worth understanding. Waiving subrogation means your carrier absorbs a loss it might otherwise have recovered, and that loss stays on your record. It is a reasonable price for a contract, but it is not free.
What I recommend
- Flag all three phrases in any contract before you sign, and send them to me together.
- Understand that each one is a policy endorsement, not a line typed on a certificate.
- Ask whether your carrier charges for them, and whether they apply on a blanket basis or per contract.
- Keep copies of the endorsements with the contract, so a later compliance audit is a filing exercise, not a scramble.
The short version
A waiver of subrogation gives up your insurer's right to recover. Primary and non-contributory decides who pays first. Both belong on the policy by endorsement, and both should be arranged before you sign, not after.
If you have any questions, feel free to reach out at any time.
