One of the most important parts of risk management is to review the contract you’re about to sign and that includes a contract’s waiver of subrogation clause. Subrogation is a basic insurance concept used in insurance contracts. If a loss occurs, it typically happens due to someone’s negligence. In general, the negligent or at-fault party is liable for the cost of the loss, so then your carrier can go after the negligent or at-fault party through a process called subrogation.
You may not find the term subrogation in your contract, but it may be under another terminology, like the transfer of rights of recovery against others to us. It’s just another word for subrogation when it comes to insurance.
When a waiver of subrogation is required in a contract, you’re waving your carrier’s right to subrogate against another party, usually the party you’re under contract with. Most policy contracts, with the exception of workers’ comp, allow you to waive this right, as long as it’s prior to the loss and it’s written down.
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