waiver of subrogation
Definition
Subrogation is the right of an insurance company to sue a third party to recover money it paid out on a claim, and a waiver of subrogation is an agreement where the insurance company gives up that right. In plain terms, you are asking your insurer to promise it will not go after another specific party (like a client or contractor) even if that party caused the loss your insurer covered.
Example
A property management company hires your cleaning business and requires you to carry a waiver of subrogation on your insurance policy, which means if your employee accidentally floods their building and your insurer pays the damage claim, your insurer cannot then turn around and sue the property management company to get that money back.
Watch Out
Adding a waiver of subrogation to your policy often costs extra, and agreeing to one in a contract without checking with your insurer first can void your coverage entirely.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.