Waiver of subrogation explained

In this Article:

• What is a waiver of subrogation?
• Why is a waiver of subrogation important?
• What does it mean to waive your rights of subrogation?
• How do I obtain a waiver of subrogation?
• How to get a waiver of subrogation

A waiver of subrogation is an important clause in insurance policies that can impact your business's liability. Here's everything you need to know to make informed decisions.

What is a waiver of subrogation?

Subrogation is when your insurance company, after paying a loss, inherits your right to recoup its payment from another party, if that party is also partially responsible for the loss.

📌 For example, suppose you are a marketing consultant, and you and your client are sued for copyright infringement. A judgment is awarded that requires your insurance company to pay in full in order to release you from the claim. A subrogation clause can be helpful if a client was also partially responsible for the loss, as you would have the right to recover the part of the loss that was your client’s fault. 

Since your insurance company paid the full amount of the subrogation claim on your behalf, they now inherit your right to recover that portion of the loss. Your insurance company can seek to recover damages from your client or their insurance company through their right of subrogation. 

📌 Subrogation is the right of your insurance company to recoup part of its loss from another party, so a waiver of subrogation gives up (waives) that right.

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Why is a waiver of subrogation important?  

📌 Subrogation and waivers of subrogation play a critical role in real-world scenarios across various industries. For instance, in construction projects, subcontractors often sign contracts requiring a waiver of subrogation to prevent insurance companies from pursuing other parties involved in a project if an accident occurs.  

Similarly, in healthcare, hospitals might request a waiver from vendors providing medical equipment to ensure claims are resolved without inter-company disputes. Another example is in landlord-tenant relationships, where landlords may require tenants to waive subrogation rights to avoid litigation if a property-related claim arises. Understanding these scenarios helps businesses anticipate the implications of waivers and manage their risks effectively.

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What does it mean to waive your rights of subrogation?

This relinquishes your right of subrogation. Clients may want your business to waive your right of subrogation so they will not be held liable for damages if they are partially responsible for a loss. When you waive your right of subrogation, your business (and your insurance company) is prevented from seeking a share of any damages paid. This waiver of subrogation may eliminate potential conflicts between you and your client.  

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How do I obtain a waiver of subrogation?

🎯 It can typically be accommodated on Hiscox policies. However, it increases exposure, since you are giving up your right to recover any losses from your client(s). Therefore, your premium may increase with a waiver of subrogation. You’ll want to factor in any premium increase when determining the price you charge your client for your work. 

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How to get a waiver of subrogation

Need a waiver of subrogation? Our licensed agents can guide you through the process and help safeguard your business.   

You can request a waiver of subrogation for your policy online, or call us at 1-888-202-3007, Mon-Fri, 7am – 10pm ET and speak to a licensed agent.   

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