Waivers of Subrogation Additional Insureds

							Waivers of Subrogation
& Additional Insureds

    Presented by: Monica McNally
            April 3, 2006
             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
               Do’s and Don’ts
• 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”
• Don’t sign Waiver after a loss
• Don’t agree to a waiver that is unreasonable
 Common Instances Involving Waivers



1.   Lease Agreements
2.   Sub-Contractors you hire
3.   Municipalities
4.   Large customers (i.e. Fortune 500 accounts)
                  Claims Examples
1. 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
2. Employee collects WC for accident occurring
   on a customer’s 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
               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
             What Can You Do?


• Negotiate it out of contract terms

• Refuse to enter into contract

• Do not take request lightly
        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