Waiver of Subrogation
Author: Tawny Schmitt, Account Administrator & Account Service Representative Supervisor
When working with shippers, they may provide you with a contract that includes a specific list of insurance requirements that need to be fulfilled prior to doing business with them. Some examples include listing the shipper with specific limits per coverage (i.e. $1,000,000 combined single limit for Auto Liablity) or being listed as additional insured on certain lines of coverage. There are many more possible requirements shippers may have, but one you may start to see more frequently is the request for a waiver of subrogation (also referred to as “transfer of rights of recovery”).
What exactly is a waiver of subrogation? When requesting a waiver of subrogation from your insurance company, you are requesting your insurance company to limit or forego their rights to subrogate against a third party listed in the contract provided by the shipper in the event of a loss. As you can see, some insurance companies may be hesitant to endorse this request to your policy(ies) without reading the shipper’s contract to verify that it is, in fact, a requirement as well as encompassing the possible liabilities the insurance company (as well as the trucking company) are opening themselves up to.
Some trucking companies may also be weary of requesting to endorse a waiver of subrogation on their insurance policy(ies). One option they have is to negotiate this requirement out of the contract prior to signing. While many shippers may not honor a request of this nature, it is great practice to negotiate terms in order to adequately protect the trucking company as well as their insurance company.
Something to note with requesting a waiver of subrogation to be endorsed to your policy(ies) is that it may result in additional premium. Trucking companies should weigh the cost of the endorsement(s) along with the possible profit to be made working with the shipper to ensure it is profitable for their company in order to proceed.
A waiver of subrogation can be added to numerous insurance coverages, such as Auto Liability, General Liability, Workers Compensation and Property. If there is ever a question in regards to if your current insurance policy(ies) meet contract requirements, forward the contract to your insurance agent for review. They will be able to verify which requirements are met as well as what endorsements may need to be requested in order to fulfill the contract requirements to move forward with working with shippers if desired.