Waiver of Subrogation
A waiver of subrogation is a contractual or policy endorsement that prevents an insurer from exercising its right of recovery against a third party after paying a covered claim.
Definition
A waiver of subrogation is a provision that eliminates or restricts an insurer’s legal right to pursue reimbursement from a third party that may have caused or contributed to a covered loss. In standard insurance practice, the right of recovery arises through subrogation, which allows an insurer to step into the legal position of the insured after indemnifying the loss. When a waiver applies, that right is contractually relinquished with respect to specified parties.
Structural Characteristics
- Underlying Right: The insurer’s recovery right originates from the principle of indemnity-in-insurance.
- Contractual Basis: The waiver typically arises from a separate agreement between parties (e.g., construction contracts, lease agreements).
- Policy Endorsement: In many commercial policies, the waiver is activated through a specific endorsement, such as certain forms related to additional-insured-endorsement.
- Scope Limitation: The waiver generally applies only to identified third parties and specified operations.
Parameters & Conditions
- The waiver must be supported by a valid contract executed prior to the loss in many policy forms.
- It typically applies only to losses otherwise covered under the applicable policy.
- Some policies limit waiver applicability to written contracts entered into before the occurrence.
- It does not alter the insurer’s obligations under the liability-insurance or property coverage itself; it modifies post-loss recovery rights.
Topic Relationships
Exceptions, Limitations & Boundaries
A waiver of subrogation does not create new coverage and does not expand policy limits. It applies only to the insurer’s recovery rights against specifically identified parties. It does not prevent recovery actions against parties not included in the waiver. Additionally, statutory or public policy restrictions may limit enforceability in certain jurisdictions.