Waiver of Subrogation

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A waiver of subrogation refers to a contractual agreement in which an insurer waives the carrier's right to seek damages or seek legal recourse from a third party due to a breach of contract by that third party. In most cases, a waiver of subrogation will be included as an addendum to a general grant of insurance. Many times, however, the carrier will require the insured to sign a separate document acknowledging that the carrier has waived its right to subrogate. In many states, a separate action against the insured may be filed if the waiver of subrogation is not included as part of the overall grant of insurance. In the case of the waiver of subrogation, the action may be commenced by suing the carrier.

Waiver of Subrogation generally refers to an agreement entered into between an insurer and a commercial purchaser who has purchased insurance coverage. The agreement may also describe a procedure for dealing with disputes concerning the purchase. Under a waiver of subrogation, the insured essentially consents to the insurance carrier's right to sue. If the carrier is successful in collecting from the person who purchased the policy, the carrier is often awarded a large sum in its attempt to collect.

There are several key takeaways to recognizing the waiver of subrogation clause. First, the individual purchasing the policy actually waives their rights to bring a lawsuit in the event of a breach of contract. This is also recognized as a "gag" in legal circles. Second, most of these clauses do not actually change the basic structure of the contract. This is the same with most other types of addendum to a contract. Finally, there is no actual enforceable guarantee that the carrier will be paid when the contract is breached.

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