When it comes to negotiating the insurance and risk-shifting terms of any garden variety business contract, the oft-used but rarely understood—or vaguely understood—“waiver of subrogation” arguably takes the lead for provisions that unnecessarily slow things down and engender confusion. An increasingly common source of delay and confusion seems to be whether a contracting party will, or even can, waive its liability insurer’s subrogation rights against the other party, especially when the latter is required to be listed as an additional insured on the first party’s liability insurance policy. At best, confusion in this area can gum up the works during negotiations and slow things down. At worst, it can lead to very unpleasant surprises down the road.

Lawyers are already famous in the eyes of their business counterparts for slowing down the contracting process by either haggling over unimportant issues or being too afraid of unavoidable or minor business risks. Shedding light on issues attendant to waiving a liability insurer’s subrogation rights may give lawyers some of the tools needed to avoid contractual pitfalls and improve efficiency.