Often times our clients are required to waive the Insurer’s rights of recovery when entering into a contract. Beware of the contracts you are signing!
A waiver of subrogation is an agreement between two parties in which one party agrees to waive their rights to recover the amount paid for a claim from the party responsible for the loss. The intent of the waiver is to prevent one party’s insurer from pursuing subrogation against the other party. The most common lines of coverage this request is made on are Property, General Liability, Workers’ Compensation and Automobile. Some insurance policies automatically include a wavier of subrogation prior to a loss if required by a written and executed contract. However many times there is an additional charge to have this endorsed on to a policy in favor of the requesting party. Every Insurance Carrier has different underwriting guidelines. Sometimes carriers are unable to endorse policies to include a waiver of subrogation . Also, there are some states that do not allow waivers on certain lines of coverage.
Careful consideration should be taken before granting waivers of subrogation. It is important to check with your insurance agent and legal counsel prior to signing contracts.
Authors: Holly River, Commercial Account Manager & Angela O’Malley, CISR, Commercial Account Manager