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Waiver of Subrogation Clause

A provision in which each party gives up its insurer's right to sue the other to recover a loss the insurer has already paid.

Reviewed by GC AI Solutions Team•Updated August 2026

Definition

A waiver of subrogation clause stops an insurer from stepping into its policyholder's shoes to sue the other contracting party after paying a covered loss. Subrogation is the insurer's right to recover what it paid from whoever caused the damage, and the waiver gives up that right in advance. The parties agree that each will look to its own insurance for covered losses rather than to each other, and they arrange their policies to permit the waiver. It is most common in leases and construction contracts, where both sides carry property insurance on the same building.

  • Gives up the insurer's right to recover, after paying a claim, from the other contracting party
  • Directs each party to look first to its own insurance for covered losses
  • Is usually mutual in leases and construction, so neither side's carrier can pursue the other
  • Depends on the insurance policy permitting the waiver, which most property policies allow by endorsement
  • Pairs with an obligation to carry the insurance and to flag any carrier that will not consent

Construction contracts on the standard AIA forms build in a broad mutual waiver of subrogation for property-insured losses, which is why the clause is nearly automatic on large building projects.

What It Does

A waiver of subrogation reroutes who ultimately pays when property is destroyed. After an insurer covers its policyholder's loss, it normally inherits that policyholder's right to sue whoever caused the damage, a right called subrogation. This clause switches it off in advance: each party agrees to look to its own insurance for covered losses and not to chase the other, and, just as important, agrees its insurer cannot chase the other either. For in-house counsel, the value is certainty and preserved relationships. A landlord and tenant, or an owner and contractor, who both insure the same building do not want their carriers fighting over a fire one of them arguably caused. A practical test: read it together with the insurance article, because a subrogation waiver only works if your policy permits it, and a waiver your insurer never agreed to can void your own coverage.

When You'll See It

The waiver of subrogation is standard in commercial leases, construction and design agreements, equipment leases, and supply or manufacturing contracts where the parties share a site or insure the same property. In leases it is mutual, with landlord and tenant each releasing the other for property losses their insurance covers. In construction it rides on the property and builder's-risk policies, often written to protect the owner, contractor, and every subcontractor under one program. It almost always sits inside the insurance article rather than on its own.

It matters most where two parties operate in the same physical space and both carry insurance, so a single fire or flood could trigger overlapping claims and finger-pointing. The waiver decides that question up front: each carrier absorbs its insured's loss and gives up the right to shift it. The more the parties share a building, a job site, or expensive equipment, the more a subrogation waiver keeps their insurers out of court with each other.

Examples

Kumagai Family Trust (Landlord) / SANUWAVE, Inc. (Tenant)

LeaseMutual property-loss waiverMutual2025
"Anything in this Lease to the contrary notwithstanding, Landlord and Tenant each hereby waives any and all rights of recovery, claim, action or cause of action, against the other, its agents, partners, shareholders, officers, or employees, for any loss or damage that may occur to the Property, Building or Real Estate, or any improvements thereto, or any personal property of such party therein, by reason of fire, the elements, or any other cause..."
Source

The New York Times Building, LLC (Owner) / AMEC Construction Management, Inc. (Construction Manager)

Construction Management AgreementOwner-controlled insurance program waiverOne-Sided2008
"Any policy of insurance covering Construction Manager or any Trade Contractor or Lower Tier Contractor owned or leased machinery, watercraft, vehicles, tools, or equipment against physical loss or damage shall provide for a Waiver of Subrogation as to any claims against any insured parties under the Owner Controlled Insurance Program."
Source

Skechers U.S.A., Inc. (Owner) / Contractor

Construction ContractInsurer waiver in favor of the ownerOne-Sided2010
"If the Contractor secures such insurance, the insurance policy shall include a waiver of subrogation as follows: 'it is agreed that in no event shall this insurance company have any right of recovery against the Owner.'"
Source

BRE-BMR SCD LLC (Landlord) / ClearPoint Neuro, Inc. (Tenant)

LeaseTenant procure-or-indemnify waiverOne-Sided2025
"Tenant agrees to endorse the required workers' compensation, employer's liability and other liability insurance policies to permit waivers of subrogation as required hereunder and hold harmless and indemnify the Landlord Parties for any loss or expense incurred as a result of a failure to obtain such waivers of subrogation from insurers."
Source

Negotiate

If you want a mutual waiver (you share a site and carry insurance)

You share a site and carry insurance

  • Make the waiver mutual and reciprocal, so neither party's insurer can pursue the other for an insured loss.
  • Confirm your property policy permits the waiver and get the insurer's endorsement, since an unconsented waiver can jeopardize your coverage.
  • Tie the waiver to losses actually covered by insurance, so an uninsured or excluded loss still leaves your ordinary remedies intact.
  • Extend the waiver to the parties you cannot control but who share the risk, such as subcontractors, affiliates, and lenders.

If you want to limit the waiver (you do not want to give up recovery)

You do not want to give up recovery

  • Narrow it to property damage covered by the required insurance, and keep liability, personal injury, and willful misconduct outside the waiver.
  • Exclude deductibles and self-insured retentions, so you are not silently waiving the uninsured slice of a loss.
  • Resist waiving subrogation for damage caused by the other party's gross negligence or intentional acts.
  • Require proof that the other side's insurer has agreed to the waiver before you rely on it.

Get the endorsement before you sign, because a subrogation waiver only protects you if your policy backs it, not after the building burns.

Red Flags

  • A subrogation waiver your insurer never agreed to, which can void or reduce your own property coverage.

  • A one-sided waiver that releases the other party's carrier while leaving yours free to pursue them, or the reverse.

  • A waiver broad enough to cover liability or injury claims, when it is meant only for property losses.

  • A waiver that silently includes deductibles and self-insured amounts, so you give up the uninsured part of every loss.

  • A waiver that survives even the other party's gross negligence or intentional damage, with no carve-out.

Waiver of Subrogation Clause FAQs

What is a waiver of subrogation clause?
A provision in which each party gives up its insurer's right to step into its shoes and sue the other party to recover a loss the insurer has already paid.
What is subrogation in simple terms?
Subrogation is the right of an insurer that has paid its policyholder's claim to pursue whoever caused the loss and recover what it paid. A waiver of subrogation gives up that right in advance.
Why do leases include a waiver of subrogation?
Because the landlord and tenant often both insure the same building, a single fire or flood could set their insurers against each other. A mutual waiver sends each loss to the carrier that insured it and keeps the parties' relationship intact.
Does a waiver of subrogation need insurer consent?
In practice, yes. A subrogation waiver can void or reduce your coverage unless your policy permits it. Most commercial property policies allow the waiver, usually by endorsement, but you should confirm it.
What is the difference between a waiver of subrogation and a release of liability?
A release of liability gives up your own right to sue the other party. A waiver of subrogation gives up your insurer's right to sue them after it pays your claim. The first protects the other party from you, and the second protects them from your carrier.
Is a waiver of subrogation the same in construction contracts?
The idea is the same, but construction contracts usually tie it to the property and builder's-risk insurance and extend it to owners, contractors, and subcontractors at once. The standard AIA forms include a broad mutual waiver for property-insured losses.

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This content is for informational purposes only and does not constitute legal advice.