Contracts in construction almost always carry boilerplate waivers of subrogation. They whisper in fine print that parties surrender rights to recover from one another—even when the party seeking recovery never saw a penny from insurance. Why do we sign these waivers? Few can explain. As one columnist put it, “companies who insist on waivers of subrogation … do not know why they do so” and simply follow the norm. In Bryan Builders, LLC v. Cincinnati Casualty Co., the Indiana Court of Appeals gave chilling clarity: a waiver of subrogation can extinguish recovery even when the only sum paid is the deductible—no insurance claim benefits were ever paid.
The case arose under a national master construction agreement between Amazon.com Services, LLC (as owner) and Bryan Builders, LLC (as general contractor). That agreement incorporated standard AIA documents (A102, A201), mandating that Amazon carry an all-risk property insurance policy for the owner, contractor, and all subcontractors, and moreover imposing a sweeping waiver of subrogation among all contracting layers for “damages to the extent covered by property insurance.” As part of a warehouse project in Plainfield, Indiana, Bryan Builders was tasked with installing a dehumidification system. During construction, a fire damaged portions of the work, and Bryan Builders, at its expense, remediated roughly $1 million in damages. Because the policy had a $35 million deductible, Amazon’s insurer, ACE American, disbursed nothing. Bryan Builders then pursued its subcontractor, Steel Services, Inc., and Steel’s subcontractor, Fair Family Corporation (and their insurers, Cincinnati Casualty and Atlantic Casualty) for reimbursement.
Bryan Builders argued: we paid the costs, we bore the loss—no insurer wrote a check—but the damage unquestionably fell within the insured perils. A waiver should not apply where no benefits were paid. The trial court disagreed, granting summary judgment against Bryan Builders. The Indiana Court of Appeals affirmed. The court rejected any “no-payment = no coverage” argument, holding that whether a loss is “covered by insurance” refers to the nature of the risk under the policy’s terms, not whether a payment was ever made. Since the fire damage was within the scope of the all-risk coverage, the waiver of subrogation was effective, even though the insurer refused payment due to the deductible.
In doing so, the court leaned on long-standing precedent. In South Tippecanoe School Building Corp. v. Shambaugh & Son, Inc., 395 N.E.2d 320 (Ind. Ct. App. 1979), the court recognized that deductible amounts still count as “covered by insurance” for waiver purposes, reasoning that the party bearing the deductible is effectively acting as the insurer for that portion. Teton Corp. and U.S. Automatic Sprinkler further reinforced the philosophy that parties deal with each other via insurance, not litigation, even for fire losses arising during construction. The court also rejected Bryan Builders’ attempt to rely on indemnity terms in the subcontract, noting that the master agreement expressly preserved the waiver’s priority even over indemnity obligations. The fact that Steel Services never had direct notice of the master agreement was of no matter: the owner’s promise to provide coverage for subcontractors made them intended beneficiaries, and the subcontract addendum deleting references to the master agreement could not undo the waiver. Thus, Bryan Builders was left to absorb a seven-figure loss without recourse.
What makes this decision so potent for subrogation professionals and risk managers is its stark reminder: even when no insurer pays, a waiver of subrogation may still carry the full force of law. You might think a waiver is harmless in a high-deductible regime—but Bryan Builders proves it is not.
For those accustomed to seeing waivers as background noise in contracts, this case should jolt attention. Many companies require these waivers reflexively: a clause in the standard form, a line in the bid package, a non-negotiable condition of subcontracting. Yet, as Gary Wickert has observed, “companies who insist on waivers of subrogation … do not know why they do so … they simply cannot explain the rationale—they only know that it would be worrisome at some unknown level to deviate from that norm.” The metaphor is powerful: like monkeys attacking one another to prevent climbing a ladder, parties perpetuate waivers without ever understanding why.
In this light, Bryan Builders invites a reexamination of risk and contracting practice. For large companies, particularly self-insured entities or those with high deductibles or self-insured retentions, a waiver of subrogation may unwittingly strip away the right to recover losses that fall under the deductible—even though the insurer never contributes. Imagine a multi-million dollar loss, paid entirely by the contractor or entity, with the waiver preventing recovery. That is the real risk lurking behind an innocuous clause.
The Bryan Builders decision harbors a practice pointer and a sage piece of advice for every large company who enters into construction contracts. In negotiating contracts for large projects, risk managers should strongly question whether a waiver of subrogation is truly necessary when the deductible or self-insured retention is so high that insurance is unlikely to respond. In many such scenarios, the waiver functions as a trap rather than a shield—it gives away valuable rights for little perceptible benefit. Even if waivers are standard in your industry, take time to understand and challenge them. Large self-insured companies and corporate entities need to treat waiver-of-subrogation clauses with suspicion—not as boilerplate to accept blindly, but as potential landmines. If loss exposures are handled primarily in-house, the value of a waiver might be negligible—yet its cost, if triggered, could be ruinous.
The lessons of Bryan Builders extend beyond construction. Wherever contracts layer risk and allocate insurance responsibilities, the possibility that waivers will be read as binding—regardless of payment—must be on the radar. Subrogation counsel should always examine underlying contracts early, not after a loss is incurred. Even when a loss seems “free” to recover (since no insurer paid), the waiver could silently extinguish that option.
In the end, Bryan Builders tells a cautionary tale: waivers of subrogation are not mere formalities. They are powerful contractual devices capable of vanishing your right to recover—even when no insurance benefit has been paid. Risk managers, insurers, and recovery professionals must not treat waivers as invisible plumbing. They deserve deliberate scrutiny, especially in high-deductible regimes. Because when the waiver is triggered, your recovery may disappear without a trace.
