Subrogation waiver

Subrogation waiver
See also

Subrogation waiver takes place when the insured waives the right of his insurer to seek compensation for losses resulting from the negligence of a third party. Many construction contracts and leases include a waiver of subrogation clause. In general, insurers charge an additional fee for this special policy approval[1].

Worth knowing[edit]

The most important to know is[2]:

  • The subrogation law allows the insurer to afford an insured after meeting the claim paid to the insured on the basis of the company's obligations under the insurance policy
  • An insurance company may assert claims from other parties to cover its costs for the same loss. It works even if the loss involves settling claims brought against the insured.
  • If the company resign from subrogation, the insurance company can not “enter the customer shoes” when the claim is settled and sue the other party to recover their losses.
  • So if subrogation is waived, the insuring company is exposed to much greater risk.So if subrogation is waived, the insuring company is exposed to much greater risk.


Assume that the tenant inadvertently causes a building fire. As a result of a fire, the building is unusable for 6 months. In this case, the landlord brings in an insurance claim and receives payment from the security company for his losses. In the absence of a waiver subrogation, the insurance company of the landlord has the right to sue the tenant to recover the money. In such a situation, the tenant's solvency decreases, and the landlord still wants to receive a tenancy fee from the tenant. On the other hand, when the landlord shows some negligence, the subrogation waiver blocks the tenant's insurance company from suing the landlord. If the landlord loses, there is a risk that he may, for example, raise the rent. Subrogation waiver is usually possible from two sides.

In a traffic accident[edit]

Subrogation waiver are often used in the event of a car accident.

  • If someone has an accident, the second driver is to blame.
  • The insurance pays for the car repair and then they collected the car insurance.
  • This practice is used so that the insured can repair the vehicle before considering the dispute.

Breach of the insurance contact[edit]

The insurance almost always contains conditions that prevent the insured from taking action that limits the insurer's right to a court order. What if you sign a contract that involves a waiver of the cessation agreement? The answer is that the insured violated the insurance contract. The insurance company refuses to provide insurance coverage. It does not cover you for damage caused by an insurance policy.

Company rules may generally contain a waiver of subrogation. By renouncing the right to reimbursement, Insurer now has fewer rights to compensate for the losses we may incur[3]. This increases our commitment, which can lead to a higher premium.


  1. Merkin R., Steele J. (2013), page 185
  2. Senn M. A. (2017), pages 10-35
  3. Merkin R., Steele J. 2013, page 185


Author: Magdalena Wójcik