1. Forms
2. CG
3. CG-24-09

Waiver of Transfer of Rights of Recovery Against Others to Us (CG 24 09)

The CG 24 09 endorsement, formally titled "Waiver of Transfer of Rights of Recovery Against Others to Us," is a crucial modification to the standard Commercial General Liability (CGL) policy. Its primary purpose is to waive the insurer's right to subrogate against a specific person or organization with whom the named insured has entered into a written contract. In simpler terms, if this endorsement is in place and the insurer pays a claim for which a third party (named in the endorsement) is responsible, the insurer cannot then seek to recover those payments from that third party. This is a common requirement in contractual agreements where one party wants to protect another from potential lawsuits by their insurer.

Classes of Business It Applies To

This endorsement is widely used across various industries, particularly those involving contractual relationships where risk allocation is a key concern. Some prominent examples include:

• Construction: General contractors often require subcontractors to have this waiver in place, naming the general contractor. This prevents the subcontractor's insurer from suing the general contractor if a loss occurs due to the general contractor's partial or full negligence. For instance, if a subcontractor's employee is injured due to unsafe conditions created by the general contractor, and the subcontractor's CGL policy pays for the injuries, this waiver would prevent the insurer from seeking reimbursement from the general contractor.
• Commercial Leases: Landlords frequently require tenants to provide a waiver of subrogation in their favor. If a fire caused by the landlord's negligence damages a tenant's property, and the tenant's insurer pays for the loss, this endorsement would bar the insurer from suing the landlord.
• Service Agreements: Companies hiring vendors or service providers (e.g., equipment maintenance, consulting) may request this waiver to avoid potential litigation between insurers if a loss occurs for which the hiring company could be held responsible.
• Manufacturing: A manufacturer might require a component supplier to waive subrogation rights to prevent the supplier's insurer from seeking recovery against the manufacturer if the supplied component contributes to a larger product failure.

Special Considerations

There are several important factors to consider when utilizing the CG 24 09:

• Written Contract Requirement: The waiver typically only applies if there is a written contract between the named insured and the person or organization listed in the endorsement (or in a schedule if a blanket waiver is provided via a different form), and this contract must require the waiver. Furthermore, this written agreement to waive subrogation must generally be executed prior to the loss.
• Specificity: The endorsement usually applies only to the specific person(s) or organization(s) named in the schedule of the endorsement. It is not a blanket waiver for all third parties unless the endorsement wording specifically provides for such broader coverage (which is more common with newer automatic or blanket waiver endorsements rather than a scheduled CG 24 09).
• Scope of Waiver: The waiver is limited to payments made under the CGL policy. It does not affect other lines of insurance unless similar endorsements are attached to those policies (e.g., workers' compensation, commercial auto).
• Impact on Insured's Rights: By agreeing to this waiver, the named insured is also giving up their own right to recover damages from the specified third party for losses paid by the insurer. The insurer's rights are derivative of the insured's rights; if the insured waives their right to recover, the insurer has no right to step into.
• No Restriction on Coverage (for the Insured): The standard CGL policy allows the insured to waive their rights of recovery against another party in writing before a loss occurs without invalidating their own coverage. The CG 24 09 formalizes and confirms this for the specific parties scheduled.

Real-world example: A general contractor (GC) hires an electrical subcontractor for a new building project. The contract requires the subcontractor to add a CG 24 09 endorsement to their CGL policy, naming the GC. During construction, an accident occurs due to the GC's oversight, injuring a member of the public. The subcontractor's CGL policy responds to the claim. Because of the CG 24 09, the subcontractor's insurer cannot sue the GC to recover the claim payment, even though the GC was at fault. This helps maintain a good working relationship between the GC and subcontractor and avoids cross-litigation.

Key Information for Agents and Underwriters

• Risk Assessment: When an underwriter sees a request for CG 24 09, they are assessing the increased risk that the insurer will not be able to recover claim payments from a potentially negligent third party. The quality of the party for whom subrogation is being waived (their loss history, safety practices, etc.) becomes more critical.
• Pricing: A premium charge may apply for this endorsement, reflecting the increased risk exposure to the insurer. The charge can vary based on the nature of the waived party's operations and the potential for large losses. Some insurers offer "blanket" versions of this waiver (often on a different form number) for an additional premium, which can be more cost-effective for insureds who frequently enter into contracts requiring waivers.
• Contractual Review: Agents should advise insureds to carefully review their contracts to understand when a waiver of subrogation is required and for whom. The endorsement schedule must accurately reflect the contract's requirements.
• Coverage Gaps: It's important to ensure that the waiver applies to the correct exposures (e.g., ongoing operations, products-completed operations hazard as specified in the endorsement). The CG 24 09 specifically mentions that the waiver applies to injury or damage arising out of "your ongoing operations" or "'your work' done under a contract with that person or organization and included in the 'products-completed operations hazard'".
• Interaction with Additional Insured Status: Often, contracts require both a waiver of subrogation and additional insured status for the same party. While there can be an overlap in protection (the anti-subrogation rule generally prevents an insurer from subrogating against its own insured), having both provides broader protection and clarity, especially in complex claim scenarios.
• Clarity of Wording: The specific edition date of the CG 24 09 can be important, as ISO periodically updates forms. Newer editions may have slightly different wording or interpretations. For example, the 2019 revision of CG 24 04 (a similar endorsement) aimed to clarify issues around privity of contract.

Underwriters will consider the frequency and nature of the insured's contractual obligations requiring such waivers. An insured that constantly works for a single, large entity and waives subrogation might be viewed differently than an insured who occasionally waives subrogation for various, well-regarded entities. The key is that the insurer is giving up a valuable right of recovery, which needs to be factored into the overall underwriting assessment and pricing of the risk.