What is a ‘Waiver Of Subrogation’
A waiver of subrogation is a contractual provision where one party agrees to limit the rights of its own insurance carrier and usually pays an additional premium for a special policy endorsement allowing for coverage under such a situation. Many construction contracts and leases include waiver of subrogation clauses. Such provisions prevent one party’s insurance carrier from pursuing a claim against the other contractual party in an attempt to recover money paid by the insurance company to its insured or to a third party in resolution of a covered claim. Next Up Subrogation Equitable Subrogation Cooperation Clause Waiver Of Premium For Payer Benefit …
Explaining ‘Waiver Of Subrogation’
A right of subrogation allows an insurance carrier to stand in the place of its insured after satisfying a claim paid to or on behalf of the insured in accordance with the company’s duties under the insurance policy. The insurance company may then pursue whatever claim its insured could assert against other parties for that same loss, even when the loss involves resolution of claims brought against the insured. Because they cannot recover the money paid to or on behalf of their insureds when such waivers apply, insurance companies frequently charge an extra premium for an endorsement covering the insured for claims barred by such contractual provisions. Parties to the contract avoid suing each other, and the insurance company bears the loss.
Landlord and Tenant
When a landlord includes such a clause in a lease, the company issuing the tenant’s renter’s insurance policy usually requires an additional premium for coverage of losses paid by the insurer as a result of acts or omissions of the landlord. This is because without the waiver of subrogation clause in the lease, the insurer is able to assert a claim against the landlord for the amount paid to the insured, or on behalf of its insured in resolution of a covered claim.
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