Category: Claims handling · Reviewed by Matt Bartlett, Director · Founder · Last reviewed 2026-06-11
A subrogation waiver clause is a contractual provision by which an insurer agrees that it will not pursue subrogation against a defined party — typically the insured’s contractor, tenant or counterparty named in the underlying commercial contract.
Subrogation waivers are a feature of modern commercial contracting. Construction contracts, leases, supply agreements and joint ventures frequently require one party to procure that its insurer waives subrogation against the other party (or against named persons connected with the other party). The intent is to allocate risk between commercial counterparties through their insurance, rather than through indemnity and direct liability claims.
The waiver operates between the insurer and the third party. The third party does not need to be a party to the insurance contract to benefit; the insurer’s promise to the insured (that it will not pursue subrogation) can be enforced by the third party under the doctrines of agency, the Contracts (Rights of Third Parties) Act 1999, or as a defence to the subrogated claim itself.
The doctrine combines insurance law, contract law and third-party rights:
Leading authorities include:
Standard-form contracts in construction (JCT, NEC), property (commercial leases) and supply (FIDIC, ICC) routinely contain subrogation-waiver provisions. The insured must ensure its insurer complies with these obligations; failure can expose the insured to claims for breach of the underlying commercial contract.
Subrogation waiver questions arise at three stages.
At placement: the broker reviews the insured’s contractual commitments to identify subrogation-waiver requirements (a JCT building contract, a commercial lease, a supplier agreement) and ensures the policy responds. Endorsements to the policy may be needed, or the insurer may simply confirm the waiver in the underlying contract is binding on it.
At claim: when a loss occurs, the handler reviews the underlying contracts to identify any subrogation-waiver positions. If a waiver applies to the responsible party, the insurer does not pursue subrogation against that party. This can be financially significant — a fire caused by a contractor with no subrogation waiver might yield a £5m subrogation recovery; the same fire with a waiver in place might yield nothing.
At dispute: a third party that has the benefit of a subrogation waiver can defend the subrogated claim by relying on the waiver. The pleading is typically a clear statement that the underlying contract precludes the insurer’s claim.
The construction context is the most common. Under JCT 2016 contracts (and equivalent prior versions), the employer’s “Joint Names” insurance covers the works including subcontractor work; subrogation against the contractor and subcontractors is excluded. NEC 4 contracts have similar provisions, with slightly different formulations.
In property, commercial leases typically require the landlord to insure the building and to procure that the insurer waives subrogation against the tenant for insured perils. The waiver protects the tenant from being sued by the landlord’s insurer for damage caused by the tenant’s negligence (a fire from a careless employee, for example).
In supply contracts, subrogation waivers may extend to the supplier’s group companies, sub-contractors and named persons. The drafting needs care to capture all intended beneficiaries.
“Joint insured” approach — the underlying party is named as a co-insured under the policy, automatically defeating subrogation (the Mark Rowlands principle).
“Subrogation waiver only” approach — the policy retains the third party as a non-insured but the insurer agrees not to pursue subrogation against it.
“Conditional waiver” — applies only to defined perils or defined types of damage.
“Mutual” waiver — both parties’ insurers waive subrogation against each other and their related parties.
“Carve-outs” — waivers that exclude defined conduct (intentional acts, gross negligence, fraud).
A commercial tenant’s negligent contractor causes a fire in the leased premises, damage £3.4m to the landlord’s building. The landlord’s property insurer pays the claim and considers subrogation against the tenant. The lease (a standard FRI commercial lease) requires the landlord to insure the building and contains a subrogation-waiver provision: “The landlord shall procure that the policy of insurance contains a waiver of subrogation in favour of the tenant in respect of any insured peril.”
The subrogation waiver applies; the landlord’s insurer is contractually precluded from pursuing the tenant. The landlord’s insurer absorbs the £3.4m loss (less the deductible). The tenant’s PL insurer is not engaged because there is no subrogated claim.
However, the tenant’s own contractor caused the fire. The waiver does not protect the contractor (which is not a tenant or a named beneficiary in the lease’s waiver clause). The landlord’s insurer pursues subrogation against the contractor in the landlord’s name. The contractor’s PL insurer defends; the matter settles at £2.6m, recovered to the landlord’s insurer. The tenant cooperates with the subrogation pursuit because, although the contractor was engaged by it, the tenant has no contractual obligation to protect its contractor.
By Matt Bartlett, Director, on 2026-06-11. Next review: 2026-12-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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