Often in contracts between General Contractors and Subs, is a requirement for Waiver of Subrogation in favor of the General Contractor for Workers’ Comp. The ostensible purpose of this requirement is to avoid getting sued by the Workers’ Comp carrier of a subcontrator whose employee was injured on the worksite of the General Contractor.
The sub needs to get this approved by his Workers’ Comp carrier in order to include the wording on the certificate of insurance. Workers’ Comp carriers typically offer this coverage either on a specific contract or blanket annual basis.
The cost for the waiver on a specific contract is usually 5% of the premium for the payroll associated with the job covered by the contract. The charge for a blanket waiver is usually 2 – 3% of the annual Workers’ Comp premium.
This means that for a contractor that pays $100,000 annually in Workers’ Comp premium, the annual cost of a blanket waiver is $2,-3,000. If the sub typically works for GC’s, this is easily the best way to go, as the waiver can be added to the requisite insurance certificate automatically.
If the sub doesn’t do much work for GC’s, the occasional requirement can be met on a contract basis. It is not automatic and must be approved by the Workers’ Comp carrier. This is not generally a difficult underwriting issue, but the communication process between agent and underwriter to receive approval can take a day or two. Additionally, the client will need to keep track of the payroll associated with the job that requires the Waiver, to be picked up in the audit at the end of the policy year.
Does this keep the GC out of lawsuits from the Subs? Sort of…it avoids subro suits by the Workers’ Comp carriers, but doesn’t necessarily eliminate suits by injured employees of the Subs. While these suits are often handed back to the Subs through Hold Harmless and Indemnity agreements in the contracts, they must still be noted to the General Liability carriers of the GC’s, and may need to be defended if there is a problem with the Sub’s insurance policy.
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