PRIMARY NONCONTRIBUTORY VS WAIVER OF SUBROGATION (ENDORSEMENTS)
Primary Noncontributory vs Waiver Of Subrogation
You may have wondered what some of the words on that request mean and why you may have to pay more, sometimes hundreds or even thousands more when the certificate request goes to your broker. Understanding two of the most common requests, primary noncontributory vs waiver of subrogation wording can help you.
Defining The Terms
Primary & Noncontributory
Primary & noncontributory is a phrase that’s usually together and refers to liability insurance, such as commercial general liability, worker’s compensation, auto liability, and others.
- The primary part means that the policy with which the word applies is the first policy to pay during a claim.
- The noncontributory part of the phrase means that the policy with which the word applies is the only policy that will pay the claim. This insurance policy doesn’t have other policies tied to it to contribute payments to the claim.
Waiver Of Subrogation
How Primary Noncontributory vs Waiver Of Subrogation Affect Your Policy
Both options can extend your policy coverage to other people, which keeps your insurance company from recovering any funds from third parties, which could affect your bottom line if a claim is ever opened against you.
For example, if you are a subcontractor and are hired to repair a hospital. You may be asked to provide a waiver of subrogation and primary noncontributory to the hospital. If someone drove over the materials and hit you or one of your employees, your insurance company will have to pay all the damages, such as the building material damages, worker’s compensation, and possibly vehicle damage from the at-fault driver. The hospital’s insurance would offer no contributions for injuries and damages because your insurance policy has these two features.
In short, primary & noncontributory wording changes the relationship between the hospital and the contractor. The contractor’s insurance becomes primary. The waiver of subrogation acts similarly to the primary and noncontributory wording. You waive the right of your insurance company to try to get partial or full repayment on the claim, which means your insurance company foots the entire bill. In some cases, this can raise your premiums, costing you more money.
Primary Noncontributory vs Waiver Of Subrogation - The Bottom Line
We hope this article on primary noncontributory vs waiver of subrogation has been informative. If you are worried that this could happen to you, it is best to talk to your insurance broker before taking any work or signing any contracts. You may also need to employ a contract attorney before signing anything. You should review all the agreement terms and what work must be done. Along with such, you may want to include either or both of these endorsements for work that will be done to your property or business, as it can benefit you, as well.
For example, if you hire someone to make repairs and your insurance policy has a waiver of subrogation or primary/noncontributory emphasis, your insurance may not be responsible if someone gets hurt on the job. Their insurance will cover everything and won’t be able to sue your insurance. Therefore, depending on your situation, it could be in your best interest to have such wording in the policy. However, you may want to talk to a qualified and experienced insurance broker or attorney before making a final decision.