One of the most common benefits of a waiver of subrogation is the avoidance of lengthy litigation and negotiation, as well as the costs to pursue them. These provisions can also prevent conflict between parties to a contract, such as between a landlord and tenant. They also prevent certain parties from being held responsible for losses for which they did not cause.
Waivers of subrogation vary per contract or agreement, as well as their benefits and risks. Therefore, it is best to consult the advice of an attorney or your insurer regarding a waiver of subrogation. Some insurers prohibit their insureds from signing waivers of subrogation as they put them more at risk. Understanding the associated risks will help you make an informed decision.
Upon a loss, an insurer pays a claim to the insured for covered losses. If the loss was caused by a third party, the insurer may subrogate the claim, or recover damages from the party that caused the loss. With a waiver of subrogation, the insurer cannot pursue or sue the responsible third party for recovery. These provisions can be found in contracts or included as addendums to existing contracts. As with any contract, there must be an agreement by the parties to the contract to be valid.
A waiver of subrogation is a legal endorsement that prevents an insurer from recovering the money they've paid out on a claim from a negligent third party. This avoids lengthy and costly legal disputes that could arise in the course of contracted activities like letting a property or subcontracting construction work.