Subrogation is the legal right of an insurance carrier to pursue recovery from a third party that caused or contributed to a loss the carrier has already paid. For roofing contractors, subrogation most commonly arises when another party's insurance carrier pays a claim and then comes after you — or when your carrier pays a claim and pursues recovery from someone else. Understanding subrogation protects you from unexpected demands and helps you structure your contracts to minimize exposure.
How Subrogation Works in Practice
Suppose your crew is performing a tear-off on a commercial building. During the work, debris falls through an opening and damages HVAC equipment on the floor below. The building owner's property insurance carrier pays the $75,000 repair claim to the owner. That carrier then exercises its subrogation rights by filing a claim against your general liability policy, seeking to recover the $75,000 it paid. Your GL carrier evaluates the subrogation claim, and if your crew was at fault, your policy pays the building owner's carrier. That $75,000 now appears on your loss runs as a GL claim.
Subrogation can also work in your favor. If a material supplier delivered defective flashing that caused a roof leak, and your completed operations policy paid the resulting water damage claim, your carrier can subrogate against the supplier's products liability policy to recover what it paid. If the subrogation is successful, the recovered amount reduces the claim on your loss runs, which helps your future premiums.
Third-Party-Over Claims
The most expensive subrogation scenario for roofing contractors is the third-party-over claim. This occurs when a worker from another trade is injured on a job site due to conditions created by your roofing operations. The injured worker collects workers comp from their employer. That employer's workers comp carrier then subrogate against your GL policy, alleging your operations caused the injury.
Example: Your crew removes a skylight and covers the opening with plastic sheeting. An electrician from another sub walks onto the plastic, falls through, and suffers serious injuries. The electrician's workers comp carrier pays $250,000 in medical and wage benefits, then files a subrogation claim against your GL for the full amount plus their legal costs. Third-party-over claims are among the most litigated and expensive claims in commercial construction, with average values of $150,000 to $500,000.
Waivers of Subrogation
A waiver of subrogation is a contractual agreement where one party's insurance carrier agrees not to pursue subrogation against the other party. In roofing, waivers of subrogation are standard in GC-subcontractor agreements and are reflected in your GL endorsement CG 24 04 and your workers comp endorsement WC 00 03 13.
When you carry a waiver of subrogation endorsement and name the GC as an additional insured, your carrier waives its right to subrogate against the GC. Similarly, the GC's contract typically requires a mutual waiver — their carrier also waives subrogation against you for certain claims. These waivers prevent the circular litigation that would otherwise occur on every multi-contractor job site.
The cost of waiver of subrogation endorsements is modest — typically $250 to $1,500 per year — but failing to carry them when the contract requires it breaches your subcontract and can result in the GC withholding payment or terminating your scope.
Material Supplier and Manufacturer Subrogation
When a roof failure is caused by defective materials rather than workmanship, your carrier has subrogation rights against the material manufacturer. This is why preserving material samples, batch numbers, and installation records is critical. If your carrier can successfully subrogate against the manufacturer, the claim is removed or reduced on your loss runs. Without documentation proving the material was defective, the entire claim stays on your record as a workmanship failure.
Protecting Yourself
Carry waiver of subrogation endorsements on both GL and workers comp. Document job site conditions daily with photographs, especially around openings, edges, and areas where other trades are working. Preserve material samples and records for every project. When you receive a subrogation demand letter, forward it to your broker immediately — do not respond directly. Your GL carrier assigns defense counsel to evaluate and respond to subrogation claims. Delay in forwarding the demand can result in default judgments.
Review your subcontractor agreements to ensure they contain mutual waivers of subrogation. If your subs do not carry waiver endorsements, you are exposed to subrogation claims from their carriers when incidents occur on your job sites.