Waiver of Subrogation: What Contractors Need to Know (And How to Get Covered)

Key Takeaways:

• Most standard liability policies don’t cover waiver of subrogation clauses. You’ll need a specific endorsement.
• You can get cover on a contract-by-contract basis first, then move to blanket cover once you’ve built a track record.
• Lloyd’s syndicates will write blanket cover but are generally pricier. Local market options can save you 70% or more.

You’ve just won a big contract with a Tier 1 principal. Great news. But then you read the fine print and spot a waiver of subrogation clause.

What does it mean? Do you need to worry about it? And will your insurance actually cover it?

Here’s what you need to know.

What is a waiver of subrogation?

A waiver of subrogation is a clause where you agree that your insurer can’t recover costs from the principal (your client) after paying a claim on your behalf.

Subrogation is your insurer’s right to chase a third party for reimbursement after they’ve paid out on your claim. When you waive this right, you’re essentially telling your insurer: “If something goes wrong and you pay out, you can’t go after my client to get that money back.”

Why do principals want this? It protects them. If there’s an incident on site and your insurer pays a claim, they don’t want to be pursued for reimbursement down the track. For Tier 1 contractors managing large infrastructure projects with dozens of subcontractors, it’s standard risk management.

The catch? Most standard liability policies don’t automatically accommodate this.

Does my insurance cover waiver of subrogation?

Most standard public liability policies don’t cover waiver of subrogation clauses. You’ll typically need a specific endorsement or policy structure to satisfy this contractual requirement.

Here’s the problem: you sign a contract with a waiver of subrogation clause, assuming your insurance will handle it. But when a claim arises, your insurer may deny coverage (or worse, void your policy) because you’ve given away their rights without their consent.

Standard policies include subrogation rights as a core feature. When you contractually waive those rights without your insurer’s knowledge or agreement, you’ve created a gap between what your contract requires and what your policy actually covers.

So yes, cover exists. But it requires negotiation.

How do you get waiver of subrogation coverage?

There are two main paths: contract-by-contract endorsements for occasional work, or blanket cover once you’ve built a track record with similar contracts.

Contract-by-contract endorsements

This is how most contractors start. When you win a contract with a waiver of subrogation requirement, you submit that contract to your insurer for review. If they’re comfortable with the risk, they’ll issue an endorsement specifically naming that principal and that contract.

This works well when you’re dealing with occasional contracts or new client relationships. Your insurer can assess each arrangement on its merits before agreeing to waive their subrogation rights.

Blanket cover

Once you’ve demonstrated a good pattern (maybe you’ve been working with the same principals for a while, or you consistently win contracts with similar requirements), insurers may offer blanket cover. This means the waiver of subrogation applies automatically to qualifying contracts without needing individual endorsements each time.

Lloyd’s syndicates will often write blanket waiver of subrogation cover. But they tend to be pricier. Local market insurers may be more competitive on price, though they often prefer the contract-by-contract approach initially.

How much does waiver of subrogation cover cost?

The cost varies significantly depending on whether you’re looking at blanket cover or contract-by-contract endorsements. In 2026, we’ve seen meaningful differences on the same risk.

We recently worked with a civil contractor who’d won a significant project with a major Tier 1 principal. The contract included standard waiver of subrogation and hold harmless clauses.

Their existing insurance didn’t accommodate these requirements, so we went to market.

Option	Premium Indication
Lloyd’s syndicate	Approximately $50,000
Local market	Approximately $15,000

The Lloyd’s indication was for blanket waiver of subrogation cover (applying automatically to qualifying contracts). The local market solution was specific to this one contract. Different approaches, different price points.

For this contractor, the contract-specific route made sense. They had one major contract requiring the cover, and the local market solution included specificity tailored to the actual contract terms. If they’re consistently winning similar work in future, blanket cover might become the better option down the track.

What does the policy solution look like?

A well-structured policy addresses the waiver of subrogation requirement by extending the definition of “Insured” to include principals. Here’s how we structured cover for our civil contractor client.

Contractual liability endorsement

The policy included a “Contractual Liability (Designated Contracts)” endorsement that specifically named the Tier 1 principal. This explicitly covered the liability assumed under the contract, including the hold harmless clauses.

Waiver of subrogation satisfied

The policy definition of “Insured” was extended to include Principals. Since the insurer agreed to waive subrogation rights against any Insured, the contractual requirement was automatically satisfied. This is an elegant solution that aligns the policy with the contract without needing a separate waiver endorsement.

Operational coverage improvements

The contractor’s previous policy had a “Depth of Work Limit Exclusion” (a hard cap on how deep they could dig). This was problematic because their scope of work involved Non-Destructive Digging to 5 metres.

The new policy removed this depth limit entirely. Instead, it applied an “Underground Services Exclusion” with a practical condition: coverage is active provided the contractor contacts the relevant authority (eg Before You Dig Australia) to identify underground assets and follows their instructions before commencing work.

For this contractor (already a certified utility investigation specialist operating to BYDA standards), this fit their existing procedures perfectly. No change to operations required.

Subcontractor requirements

The policy included a subcontractors endorsement requiring all subcontractors to hold their own liability insurance with a minimum $10 million limit. The contractor simply needs to collect and retain Certificates of Currency annually.

What should contractors know about future contracts?

If your policy has a contractual liability endorsement for one principal, you’ll need to notify your insurer when you win work with new principals containing similar requirements. The endorsement typically specifies named principals only.

This is where building a track record matters. Once your insurer sees you’ve been working well with similar contracts (no claims, good operations, reliable subcontractor management), they’re more likely to offer broader cover or faster approvals on new contracts.

One more detail: our client’s policy included a $25,000 excess for personal injury to contractors, subcontractors, or labour hire personnel. These details matter when you’re assessing the true cost of cover.

Frequently Asked Questions

Do I need to tell my insurer about waiver of subrogation clauses in my contracts?

Yes. If you agree to waive subrogation without your insurer’s consent, you may have no cover when you need it. Always submit contracts with these clauses for review before signing.

Can I get blanket waiver of subrogation cover straight away?

It’s possible, but most insurers prefer to start with contract-by-contract endorsements. Once you’ve demonstrated a good track record, they may offer blanket cover.

Is Lloyd’s the only option for waiver of subrogation cover?

No. Lloyd’s syndicates will write it, but they’re generally pricier. Local market insurers can often provide more competitive terms, especially if you’re willing to work contract-by-contract initially.

What happens if I sign a contract with a waiver of subrogation clause without telling my insurer?

You’ve created a gap between your contractual obligations and your insurance cover. If a claim arises, your insurer may deny it or void your policy. It’s a risk not worth taking.

Need Help With Waiver of Subrogation?

If you’re a contractor dealing with complex contract requirements (waiver of subrogation, hold harmless clauses, contractual liability), we can help.

Need a contract reviewed? Tank Insurance specialises in finding practical solutions that meet your contract obligations without blowing your budget. Reach out to our team at 02 9000 1155 or [email protected] to discuss your situation.

This is general information only. It does not take your objectives, financial situation, or needs into account. Always read the relevant Product Disclosure Statement (PDS) and seek independent advice before making insurance decisions.