Waiver Of Subrogation
What Does Waiver Of Subrogation Mean?
A waiver of subrogation prevents an insurance company from pursuing recovery of losses from a third party deemed negligent in a claim. Such endorsements are commonly required by companies working with vendors, suppliers, or contractors performing tasks on their behalf.
These agreements often restrict insurers from recovering funds from the third party and usually result in higher premiums for policies that include this waiver. Companies that require a waiver of subrogation from vendors usually also require them to carry general liability insurance, since the waiver shifts financial responsibility to the vendor’s own policy if something goes wrong. While it is standard for vendors or suppliers to include this endorsement on their Certificate of Insurance, business owners should carefully understand how it impacts their insurance coverage.
Insuranceopedia Explains Waiver Of Subrogation
A waiver of subrogation removes an insurance company’s right to recover costs or funds paid out on a claim but does not alter the coverage for either the insured or the vendors involved. These endorsements typically come in two formats:
- Specifically Named Entity: The insurance company waives its right to subrogate against a designated third party.
- Blanket Waiver: The insurer waives its right to subrogate against any third party, provided the insured grants permission.
Small business owners who carry a business owner’s policy will often see waiver of subrogation endorsements added when they sign contracts with larger clients. A common example is an auto insurance policy with a waiver of subrogation for a specific driver. If that driver is involved in an accident caused by another motorist, the waiver prevents the insurer from suing the at-fault party or limits the extent of legal action they can take.
