Waiver Of Subrogation Rights Clause
What Does Waiver Of Subrogation Rights Clause Mean?
A waiver of subrogation rights clause is a provision in an insurance contract that prohibits the insurance company from stepping in on behalf of the insured to sue a third party for damages when the insured files a claim. Waivers of subrogation rights are commonly found in construction contracts, property insurance policies, and lease agreements. Insurance companies generally dislike waiving their subrogation rights because it increases their exposure to potential losses.
Insuranceopedia Explains Waiver Of Subrogation Rights Clause
Without a waiver of subrogation rights clause, an insurance company can sue a third party for damages if the insured party files a claim. For example, if an auto insurance policyholder’s car is destroyed by a third party, the insurer may sue that third party after settling the claim. This allows the insurance company to recover the cost of paying the claim. However, if the right of subrogation is waived, the insurance company would be unable to sue the third party and may charge a higher premium for coverage as a result.
