What is a waiver of subrogation?
-Top of page Losses typically happen through someone’s negligence. In general, the negligent party should be liable for such negligence.Your insurance company could choose to sue a third party to recover the amount of a claim they paid if the loss was caused by that third party. This is called subrogation. Some contractual agreements, including some facility rental agreements, require you to waive your right of subrogation (and therefore your insurance company’s rights) against them in the event of a claim. Many, but not all, general liability policies allow you to waive your rights of subrogation as long as it is done in writing and prior to a loss. Those that do often charge extra premium for a waiver of subrogation.
Subrogation means, in a legal sense, one party has the right to “step into the shoes” of another party for the purposes of bringing a claim for damages. Not all types of claims may be subrogated. The most common type that can be subrogated is property damage claims. Example: Joe is an electrician insured by BIG Insurance Company. He is hired by Amusement Park World to replace light bulbs in the parking lot for the park’s opening in the Spring. Amusement Park World requires Joe to sign a Waiver of Subrogation stating that BIG Insurance Company will not be able to recover (from Amusement Park World) any money paid for damages to Joe’s truck if he hits any of the huge potholes in Amusement Park World’s parking lot (a claim for which they would normally be liable). A waiver of subrogation clause is placed in a contract to minimize lawsuits and claims among the parties. The result is that the risk of loss is agreed among the parties to lie solely with the insurance company. The risk, once a
