Waiver of Subrogation

A Waiver of Subrogation is a Contractual Waiver that is often used to prevent an insurance company from seeking reimbursement from a third party for a claim it has paid.

• Context:
  • It can be included in various types of contracts, including leases, construction contracts, and service agreements.
  • It can prevent an insurer from "stepping into the shoes" of the insured to recover damages from a third party.
  • It can help maintain positive business relationships by avoiding disputes between contracting parties.
  • It can be required by some contracts to prevent the insurance company of one party from suing the other party.
  • It can affect insurance premiums, as insurers may charge more for policies that include this waiver.
  • It can be limited to specific situations or apply broadly to all potential claims.
  • It can be mutual, where both parties agree not to subrogate against each other.
  • It can be subject to specific language requirements to be enforceable.
  • It can interact with other contract provisions, such as indemnification clauses.
  • ...
• Example(s):
  • Commercial Lease Agreements, which enable landlord-tenant risk management systems.
  • Construction Contracts, which enable project stakeholder liability protection systems.
  • Equipment Rental Agreements, which enable equipment lessor-lessee risk allocation systems.
  • Vendor Service Contracts, which enable client-vendor dispute prevention systems.
  • ...
• Counter-Example(s):
  • Subrogation Right Preservation, which explicitly maintains the insurer's right to seek reimbursement.
  • Hold Harmless Agreement, which protects a party from liability but doesn't necessarily prevent subrogation.
  • Assignment of Claims Clause, which may transfer the right to pursue claims rather than waiving them.
• See: Subrogation, Insurance Clause, Risk Transfer, Contractual Risk Management, Liability Waiver.

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References

2025a

• (Wikipedia, 2025) ⇒ https://en.wikipedia.org/wiki/Subrogation Retrieved:2025-1-19.
  • Subrogation is the assumption by a third party (such as a second creditor or an insurance company) of another party's legal right to collect debts or damages. It is a legal doctrine whereby one person is entitled to enforce the subsisting or revived rights of another for their own benefit. A right of subrogation typically arises by operation of law, but can also arise by statute or by agreement. Subrogation is an equitable remedy, having first developed in the English Court of Chancery. It is a familiar feature of common law systems. Analogous doctrines exist in civil law jurisdictions. Subrogation is a relatively specialised legal field; entire legal textbooks are devoted to the subject.

2025b

• (ChatGPT-OpenAI, 2025) ⇒ Prompt: Summarize the concept Waiver of Subrogation in 1- 2 paragraphs. ChatGPT (model:gpt-4o). Retrieved: 2025-01-19.
  • QUOTE: A waiver of subrogation is an agreement between two parties where one party waives its right to seek compensation from the other for losses covered by insurance. In the context of insurance, subrogation allows an insurer to pursue a third party that caused an insurance loss to the insured. By waiving this right, the insurer cannot seek reimbursement from the responsible party, even if that party would typically be liable for the damages. This waiver is commonly included in contracts between businesses, especially in construction or property leases, to minimize claims and litigation between cooperating parties.

    The rationale for a waiver of subrogation is to prevent disputes and maintain goodwill among business partners or involved parties, ensuring that any potential liability is absorbed by the insurance provider instead of straining the relationship between contracting entities. It can also help expedite the claims process and project completion by removing the back-and-forth of fault and reimbursement claims. However, it is important for parties to carefully consider the implications on their insurance policies, as this waiver can affect coverage terms, premiums, and future policy negotiations.

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