Waiver of Subrogation Inquiry
I recently secured contracts valued at around one million dollars with several large ethanol companies for on-site work. Each of these companies has requested my workers’ compensation information, specifically requiring a waiver of subrogation to be included. For example, one client insisted that my Certificate of Insurance (COI) must include the exact phrase: “Coverage must be in favor of COMPANY NAME and its subsidiaries.”
All four of these ethanol companies have mandated this requirement for my access to their sites. However, my insurance agents have expressed concerns, stating that this demand is unusual and they are hesitant to waive their right to recover costs from these companies if they are found liable. Does this mean the ethanol companies are asking us to sign a document that protects them from being sued, even if they are at fault? I’m curious about how other contractors are managing to secure insurance that complies with these terms. Considering that these ethanol plants work with numerous contractors each week, it seems likely that some are finding coverage that meets these requirements.
Is this request from the ethanol companies unreasonable or common practice? How challenging is it to obtain coverage that includes such a waiver? Are there any insurance providers that might be willing to accommodate this stipulation? I have contracts exceeding a million dollars for work scheduled in April and May, and I want to ensure I don’t miss out on this opportunity due to a potential oversight by myself or my agent.
It sounds like you’re in a challenging situation, and it’s understandable to be concerned about the implications of a waiver of subrogation in your contracts with the ethanol companies.
To clarify, a waiver of subrogation essentially prevents your insurance company from pursuing any recovery from a third party (in this case, the ethanol companies) after paying out a claim. While this can be a common requirement in certain industries, it does place an additional burden on your business, as your insurer will no longer have the ability to seek compensation from the ethanol companies, even if they are at fault.
It’s worth noting that such waivers are relatively common in construction and contracting, especially on large projects, as companies want to minimize their liability and exposure to potential claims. However, it’s also true that waiving subrogation can be seen as a risk for your company, especially if a serious incident occurs.
Here are a few steps you can take:
Discuss with Your Agent: If your current insurance agents are hesitant, consider consulting with them about potential solutions that could address their concerns while still satisfying the requirements of the ethanol companies. This might include finding a policy with a higher premium that allows for waivers of subrogation under certain circumstances.
Look for Specialized Insurers: Some insurance companies specialize in insuring contractors in high-risk industries like ethanol production. These insurers might have more experience handling waivers of subrogation and could offer policies tailored to your needs.
Negotiate Terms: Sometimes, you might be able to negotiate the terms. You could propose that the waiver of subrogation only applies to certain liabilities or incidents—not all of them. This way, you can still protect your right to recover costs in other situations.
Review Contracts Carefully: It may help to consult with a legal professional who specializes in contract law to ensure you fully understand the implications of the waiver of subrogation and any potential liabilities you may be taking on.
Industry Awareness: It might be helpful to connect with other contractors who work in the ethanol sector. They may have insights or recommendations based on their experiences that could help you find suitable insurance solutions.
Given the amount of work you have lined up, it’s crucial to ensure that you protect your business while fulfilling the insurance requirements set by the ethanol companies. Do thorough research and consult with experts to navigate this situation effectively.