Waiver of Subrogation
A contract clause where a party's insurer gives up its right to sue another project party to recover a claim payout, even if that other party's negligence caused the loss, most common on [[concept-builders-risk-insurance|builder's risk]] policies, so that project parties don't end up suing each other over a loss the insurance was already meant to cover.
Why it matters
Without a waiver of subrogation, an insurer that pays out a builder's risk claim could turn around and sue whichever project party's negligence caused the damage to recover what it paid, which would effectively drag the project parties into litigation against each other even though everyone assumed the insurance had already resolved the loss.
On a real project
A subcontractor's equipment malfunction starts a fire that damages work covered under the project's builder's risk policy. Because the contract includes a mutual waiver of subrogation among the owner, general contractor, and subcontractors, the builder's risk insurer cannot sue the subcontractor to recover what it paid out on the claim, even though the subcontractor's equipment caused the fire.
Who this matters most to
A Contracts Administrator makes sure a mutual waiver of subrogation clause is included in every subcontract on a project that carries builder's risk coverage, since a gap in just one subcontract can leave that one subcontractor exposed to a subrogation lawsuit the rest of the project team is protected from.
Where this goes wrong
A general contractor's prime contract includes a waiver of subrogation with the owner, but the GC forgets to flow the same waiver down into its subcontracts. When a subcontractor's negligence causes a loss covered by the builder's risk policy, the insurer, not bound by a waiver it was never a party to in that subcontract, pursues the subcontractor directly for reimbursement, which the subcontract's own missing clause did nothing to prevent.