Waiver of Subrogation
Definition
A contractual provision preventing the insurer from pursuing recovery from a third party after paying a claim. The insured waives the insurer's right to subrogate against specified parties.
Example
A commercial tenant's lease requires the tenant to obtain renter's insurance with a waiver of subrogation in favor of the landlord. If the tenant's negligence causes a fire, the tenant's insurer pays the claim but cannot pursue the landlord for recovery, even though the landlord may have been partially at fault.
In Practice
Waivers of subrogation are common in commercial leases, construction contracts, and service agreements. They protect one party from subrogation claims by the other party's insurer. Insurers may charge additional premiums for waivers of subrogation endorsements. The waiver must be clearly stated in the policy or added via endorsement.