Tort Immunity: Covenants to Insure and Waivers of Subrogation


Published February 1998
Updated February 2006*

With the considerable assistance of Michal Jaworski

Covenants to insure in commercial contracts can be a powerful mechanism for immunizing the contracting parties (and even non-contracting parties) from liability. While the subject can be exceedingly technical in nature, it is of considerable importance not only for practitioners of insurance law but also for solicitors who are drafting commercial contracts or who are counselling clients with respect to protection against liability claims, subrogated or otherwise.

While the subject of immunity arising from insurance covenants most often arises as a liability defence to subrogated claims by property insurers, the genesis of the immunity is the intent of the parties, as evidenced by their contract, to restrict recoveries for certain types of property losses to available insurance without recourse to the other contracting party or their beneficiaries. At the end of this paper is a list of the leading and recent cases dealing with immunity arising from covenants to insure. Not surprisingly, most of the cases arise in the context of landlord and tenant relationships but the principles of immunity have application far beyond commercial tenancies.

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