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Interpreting subrogation waiver provisions and the impact of Hartford Fire Ins. Co. v. DeBra-Kuempel Inc. 

1/2/25

By: Doug Holthus and Aaron N. Kaeser

In Hartford Fire Insurance Co. v. DeBra-Kuempel Inc., 2024-Ohio-5830, Ohio’s First Appellate District interpreted, and found enforceable, an insurance policy’s waiver of subrogation provision. Though a predictable outcome, the decision in DeBra-Kuempel Inc. provides a cogent reminder relative to the importance of precise contractual drafting. To do otherwise could lead to the forfeiting of an otherwise valid subrogation recovery.  

At the core of the dispute in DeBra-Kuempel Inc. was whether an insurance policy’s subrogation waiver provision barred the insured’s successor-in-interest from pursuing claims against a negligent subcontractor for losses covered under a previously issued property damage insurance policy. 

Blue Ash Funding Company, LLC (“Blue Ash”) engaged DeBra-Kuempel Inc., a mechanical contractor, for a renovation project. A heating coil malfunctioned, creating a fire that caused significant property damage, leading Hartford Fire Insurance Co. (“Hartford”), Blue Ash’s property insurer, to pay the claim. Hartford subsequently filed a subrogation claim against DeBra-Kuempel to recoup funds it had paid to its insured, Blue Ash, alleging DeBra-Kuempel was negligent in the design, engineering, and/or installation of the heating coil that started the fire. DeBra-Kuempel contended that Hartford’s subrogation waiver barred Hartford’s claims. 

Hartford argued that the policy’s language was ambiguous because it did not explicitly state whether claims involving negligence were included within its scope, thus creating uncertainty as to which claims at issue were intended to be barred. According to Hartford, if the parties had intended to include negligence claims within the waiver, the policy waiver should have expressly stated so. According to Hartford, the broad wording of the waiver left room for multiple interpretations, which, in Hartford’s view, created sufficient ambiguity to justify construing the language in its favor. 

The court disagreed. The First Appellate District noted that ambiguity cannot be created by isolating specific provisions from an overall agreement. When viewed in context, the policy’s subrogation waiver clearly kept with the parties’ intent to allocate risk through property insurance coverages rather than litigation. Further, there the court determined there was no indication in the policy that the parties had intended to exclude negligence claims from the scope of the waiver. The provisions in question explicitly waived subrogation rights for damages caused by fire to the extent such damages were covered by property insurance. The language made no distinction regarding the cause of the fire, including negligence. 

Additionally, the court addressed Hartford’s challenge to a ruling on DeBra-Kuempel’s third-party complaint against a consultant, by which DeBra-Kuempel had sought indemnification and contribution, holding that Hartford lacked standing to appeal this ruling because that issue did not directly affect Hartford’s subrogation claim.  

Altogether, Hartford was barred from recouping any of its $1.9 million payout to Blue Ash.  

This decision makes clear that while subrogation waivers are enforceable, courts will rely on standard principles of contractual interpretation to uphold the parties’ intent. To avoid unintended outcomes, contracting parties should prioritize crafting clear, precise, and tailored provisions rather than relying on generic, boilerplate language.  

Please contact Doug Holthus at doug.holthus@fmglaw.com or Aaron N. Kaeser at aaron.kaeser@fmglaw.com, lawyers in Freeman Mathis & Gary, LLP’s Columbus office for assistance defending construction claims.