Waiver of Subrogation
What Is a Waiver of Subrogation in Insurance?
A waiver of subrogation is an agreement that says the insurance company can’t seek compensation for claims from the third party responsible for the damages.
Waivers of subrogation only work if:
- The policy allows waivers
- The waiver is agreed to before the loss happens
- Any required endorsement is in place
- State law allows it
What Does Subrogation Mean in Insurance?
Subrogation refers to your insurance company’s legal right to pursue the party responsible for a claim and seek reimbursement after a claim payout.
Swipe →
| Term | What It Means | Example |
|---|---|---|
|
Subrogation |
Your insurer’s right to seek repayment from the at-fault party after they pay a claim |
Your insurer pays for damage, then pursues the contractor who actually caused it |
|
Waiver of subrogation |
An agreement that your insurer will not use that right against a specific party |
Your insurer pays a claim and agrees not to go after your landlord or client (whoever is mentioned on the waiver) for reimbursement |
What Does a Waiver of Subrogation Clause Do?
A waiver of subrogation eliminates or limits your insurer’s right to pursue reimbursement from the at-fault party after a claim payout. A client or landlord may require you to have a waiver of subrogation that prevents your insurance company from going after them if they cause a claim.
This waiver usually applies only to specific parties and situations defined in your policy or contract.
Swipe →
| Scenario | Without Waiver of Subrogation | With Waiver of Subrogation |
|---|---|---|
|
Your insurer pays a covered claim |
Insurer may investigate and, if appropriate, seek repayment from any at-fault party (including a landlord or client) |
Insurer pays the claim but has agreed not to seek repayment from the specific party named in the waiver |
|
Relationship with the other party |
Other party may worry about being pursued by your insurer after a claim |
Other party has more assurance they won’t be chased by your insurer |
|
Impact on your policy |
Insurer can recover some costs, which may help the overall loss picture |
Insurer gives up recovery rights, which can impact pricing or willingness to grant waivers |
Where Will You See a Waiver of Subrogation?
Typically, you will only add a waiver of subrogation to your policy if a client, venue, or organization requires you to do so. This request is often included in your contract or written agreement with them.
Once you obtain the waiver, it will show up on your Certificate of Insurance (COI).
Swipe →
| Who Requests It | Typical Situation | Why They Want a Waiver |
|---|---|---|
|
Landlord |
Commercial lease agreement |
They don’t want your insurer coming after them if there’s a fire or property damage |
|
Client/project owner |
Service contract or professional services agreement |
They want to limit their risk if something goes wrong during your work |
|
General contractor (GC) |
Construction or trade subcontract agreements |
They want subcontractors’ insurers to pay claims without pursuing the GC |
|
Event venue |
Vendor or exhibitor agreement |
They want to reduce the chance of being pulled into recovery efforts after a claim |
How Does a Waiver of Subrogation Affect You, the Insured?
While waivers of subrogation protect other parties from being sued by your insurance company, they may have ripple effects that you feel as well.
Swipe →
| Pros | Cons |
|---|---|
|
|
Get tailored coverage by selecting your industry below.