Here’s a frequently asked question: What is the cost of a workers’ compensation waiver of subrogation? The answer isn’t straightforward since insurance companies charge for their work comp waiver of subrogation (WOS) endorsements differently. Read on to learn more!
BLANKET WAIVER OF SUBROGATION
When dealing with contractor insurance, agents will request a blanket waiver of subrogation on the work comp policy. The reason is that contractors need a waiver of subrogation frequently. Instead of endorsing the waiver per job, the blanket allows for quick and consistent issuance. Most insurance companies charge a minimum premium of at least $300 for a blanket WOS and add 2-3% on the policy’s net rates for the blanket endorsement.
SPECIFIC WAIVER OF SUBROGATION
When a policy does not include a blanket WOS endorsement, an insurance company will endorse specific waivers onto the policy. These endorsements are common for construction projects, landlords, and management companies. The range of minimum premiums for specific waivers is $100-$250, and an average cost is 3% of the work comp premium derived from the payroll on a particular job.
CLEARING UP CONFUSION
Industry professionals often confuse the cost of a specific waiver of subrogation endorsement on a work comp policy. When calculating the price of one waiver of subrogation, many people calculate the cost by using 3% of the payroll on the policy. Or, they factor the cost by using a percentage of the payroll for the project. Both of these formulas as incorrect. Instead, here is an example of a calculation considering the cost of a specific waiver is 3%, the rate on the policy is $10.00 per $100 of payroll, and the payroll on the project is $100,000.
First, calculate the work comp premium from the project: $100,000 / $100 * $10.00 = $10,000
Then, calculate the cost of the workers’ compensation waiver of subrogation: $10,000 * 3% = $300
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