If a loss occurs, it typically happens through someone's negligence.
In general, the negligent (or "at fault") party is liable for the cost of the loss. Your insurance carrier can "step into your shoes" and choose to sue the at-fault party to recover the amount of a claim they paid for you. This is subrogation.
You may not find the term "subrogation" in your contract, but that doesn't mean it's not there - check for the terminology "Transfer of Rights of Recovery Against Others to Us," which some insurance policies use.
When a waiver of subrogation is required, it means you are "signing away" or waiving your insurance company's right to subrogate against another party. This is not an uncommon practice. In fact, most policy contracts allow you to waiver your rights of subrogation as long as it is done IN WRITING AND PRIOR TO THE LOSS. Often an endorsement is added specifically referring to the exact contract as a means of clarification.
A waiver of subrogation clause is placed in a contract to minimize lawsuits and claims among the parties. The risk is determined to stop there, without allowing the insurer to seek costs from a third party. This guarantees that if a loss occurs, the owner's insurer pays the claim and the insurance proceeds can be used to fund the cost of repairs without determining who was at fault.
Without a waiver of subrogation, litigation or arbitration is frequently needed to determine which party caused the accident, possible resulting in long and costly delays.
It's important when agreeing to any and all contractual language that it mirrors your policy. As your insurance partner, we are committed to helping you understand how your policy language impacts your contractual risks.
Call us today to learn more about how we can assist you mitigate these risks.
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