Tuesday, January 16, 2018
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Waiver of Subrogation

A waiver of subrogation is an agreement not to pursue legal rights of recovery against the party in whose favor the waiver is executed.

Subrogation is the legal substitution of one entity for another. As part of an insurance contract the insured subrogates  its legal rights to recovery of damages over to the insurance carrier. If the carrier pays out on a claim and another party was liable or contributed to the damage your (the insured) carrier may excercise its right to subrogate and seek to recover from another party such as your general contractor or your sub contractor or the building owner or some other entity as the case may be.

When a carrier waives this right the endorsement is a "Waiver of Subrogation". This is also sometimes referred to as a "Waiver of Transfer of Rights of Recovery". The wording may be "Waive Substitution" as well

In a construction contract this waiver is not necessarily a bad thing but it is sometimes set up as  a "one way" proposition. That is, the sub may be expected to waive its rights while the general contractor intends to keep its right to subrogate. Since the waiver is essentially a contractual issue it is important to ensure that the insurance carrier is willing for its insured to waive this legal right in a contract. This transfer of rights would likely not be honored if the contract was signed after the loss or if there were no written contract. If you receive a "Waiver of Subrogation" from your subs carrier it means that if his carrier pays out on a claim the process should have ended and you won't later see a claim against your policy for the same loss where his carrier is trying to recover the payment it made from your carrier.

For more detailed expert commentary on this topic see the article, "Insurance Coverage - Waiver of Subrogation" and "What is Subrogation"



Venture Insurance Services
124 E. Olive Ave.
Burbank, CA 91502