Agreements to Waive Subrogation and insure Preclude Subrogation

A recent Indiana Supreme Court case held that a contractor's negligence is not actionable in subrogation by other tenants or their insurers where only property damage results and the subject contract contains a broad waiver of subrogation provision as well as agreements to insure against loss. U.S. Automatic Sprinkler Corp. v. Erie Ins. Exch., 204 N.E.3d 215 (Ind. 2023).

In a case where a contractor performed work on a sprinkler system that later failed and caused property damage, insurance companies that covered the loss for four commercial tenants were prevented from seeking recovery from the contractor in subrogation. The inspection agreement between the contractor and property owner stated that no insurer or third party would have subrogation rights, which the Court held was evidence of the parties' intent to shift the risk of loss to insurance.

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