At SIA, we know insurance requirements in contracts can feel overwhelming and confusing. That's why we're here! To explain what they mean, help you meet venue requirements, and make sure you're covered when it matters the most. Many of you have probably seen the terms "Waiver of Subrogation" or "Primary/Non-Contributory" when reading insurance requirements. Both are endorsements that some venues may require on their certificates of additional insured, but what are they? Let's break it down.
The Waiver of Subrogation is a contract provision that prevents an insurance company from seeking compensation from a third party after paying for a loss. This waiver is often used to maintain good relationships between parties and avoid legal disputes. It can also help streamline the claims process!
The Primary/Non-Contributory endorsement is a policy clause that makes a specific insurance policy the first to respond in the event of a claim. It also clarifies insurance responsibilities and can prevent future disputes over covering losses.
In simple terms, you can think of both endorsements as extra layers of protection to clarify responsibilities if a lawsuit arises involving your operations while on another's premises. If you think about the words themselves, it can help you understand the difference between the two:
- Waiver of Subrogation: "Subrogate" means to pass a lawsuit from one entity to another. This endorsement prevents an additional insured (like an event/venue) from being held financially responsible if a claim arises from your operations.
- Primary/Non-Contributory: Ensures your policy is the first (primary) to respond to a claim, and it won't try to force the additional insured's policies to share the cost (they won't contribute).
Here's an example of those endorsements at work (details have been changed for privacy). Additionally, we're sharing this claim to educate, not to shame. This is an old claim, but it wasn't settled until 2024 (which tells you a little about how serious it was)!
In 2019, one of SIA's vendors was booked to sell coffee and other drinks at a Renaissance fair. Their booth space had a garage door to close when it wasn't in use, but while they were setting up, they noticed the garage door was faulty; it would just fall on its own accord. Upon this discovery, the vendor promptly notified the fair manager, as well as other fair personnel, numerous times before opening day. However, as you all know, it's so busy during that time, and the door was never fixed.
Having already paid to be at the fair, gathering supplies, and hiring staff, the vendor felt they had no choice but to open. The garage door ended up falling onto a patron's head, who later sued the fair for $10,000,000, citing extreme neurological damage. Later, the amount asked was dropped to $2,000,000, which curiously was the vendor's policy limit at the time.
Our policy's lawyers initially tried to claim that the fair had some liability due to not fixing the door on their property as asked by the vendor, and they should share the cost of the payout, but the additional insured certificate issued included both the Waiver of Subrogation and Primary/Non-Contributory endorsements. Our insured's policy ended up paying the total cost of the claim, which finally settled for $600,000, not including extensive legal fees.
Sometimes these endorsements are included in a policy, but sometimes they are not. If they are not included, the insurer will either charge an extra premium to issue the endorsements for you or they could decline to issue them at all. Both the Waiver of Subrogation and Primary/Non-Contributory endorsements are included in the Performer and Vendor policies, but they're not included for MPEP policies. They are, however, available for an additional premium for MPEP program members!
Since these documents are common endorsements needed to fulfill contractual requirements, it's always a good idea to ensure they're available to you should you need them.
Endorsements like the Waiver of Subrogation and Primary/Non-Contributory may seem like just more paperwork, but they play a big role in how claims are handled. If you have any questions about endorsements or the insurance requirements in your contracts, please give our office a call (715-246-8908) or send us an email (info@specialtyinsuranceagency.com)!
