On its face, the power of a waiver of subrogation clause in a construction contract is profound. It bars otherwise actionable – and sometimes egregious – losses resulting from contractor carelessness before they can ever get started. One question courts have long battled with is the limits to the lasting effects of such a waiver. Whether the waiver power can be transferred amongst parties, applied to third parties or used with policies taken out after construction completion are among the few grey areas that have kept subrogation practitioners and the courts busy. Recently, a federal court in Idaho clarified its position on the power to waive subrogation.

In Seneca Ins. Co. v. McAlvain Constr., Inc., No. 1:24-cv-00340-BLW, 2025 U.S. Dist. LEXIS 251777 (D. Idaho), the United States District Court for the District of Idaho (District Court) addressed whether a subrogation waiver in an AIA construction contract, signed between an owner and the general contractor, applied to the subsequent owner of a building. In doing so, the court looked at the limiting language of the waiver as well as the contractual posture of the subsequent owner. Ultimately, the court found the waiver inapplicable, denying the motion for summary judgment of Defendant, Cross-Plaintiff McAlvain Construction, Inc. (McAlvain).