American businesses are spending nearly $60 billion a year on Workers Compensation claims that require at least six missed work days, according to a recent analysis by Liberty Mutual Insurance. All but a small fraction of this money is spent on the top 10 causes of serious workplace injuries. If you employ workers in the skilled trades, this is a trend you need to know about. Read more
Two subcontractor minions, Dave and Stuart, are working on a construction site, preparing to take over the world for their evil overlord. As construction commences one of Dave’s employees accidentally fires a missile into a piece of equipment owned by Stuart. Minions fly everywhere. Everything stops. And Stuart prepares to file a claim against Dave for the damage his errant bazooka missile caused.
Making a Claim with a Waiver of Subrogation
Stuart now has two choices – he can file a claim for damage with his own insurance company or he can pursue a liability claim against Dave (or he might punch Dave repeatedly in the face, we don’t know). What we do know is that he cannot, however, do both. Say for instance, if Stuart’s property insurer pays his claim, according to the terms of the policy, Stuart’s right of recovery against Dave is transferred to his insurer. After paying that claim, Dave’s insurer will file its own claim against Stuart; this process is called subrogation.
What is a Waiver of Subrogation?
Subrogration is an issue in property claims like the one Stuart and Dave dealt with (though off-screen) as well as auto claims, general liability claims, and even workers’ compensation claims. But, what if you don’t want to go through the process of subrogation? Enter, the waiver of subrogation.
In order to minimize disputes and litigation between parties, contracts frequently attempt to make clear that the risk of certain losses is to lie with insurance companies. Waiver of subrogation language is added to the contract to make sure that the insurance company that pays a claim doesn’t try to undo the intent of the contract. The party that suffers a loss agrees not to pursue a claim against the responsible party and often, to show evidence that his insurance company is waiving its right of subrogation.
What Policies are Covered Under a Waiver of Subrogation?
So, we understand that what was mentioned above may have you feeling like Stuart does in the GIF above. Here is a simplified definition of the waiver of subrogation as well as some of the policies that can co-exist with the waiver. A waiver of subrogation essentially assures that when an insurance company pays a claim (as in the case above) they cannot use that claim as leverage to adjust the contract to suit their needs. Here are the plans that are associated with this waiver.
- Auto claims
- General liability claims
- Workers compensation claims
- Property claims
Our job is to ensure that you are properly insured and able to move on after any accident or traumatic event that may befall your business. If you have any further question about subrogation please feel free to give us a call at 1-800-649-9094. We look forward to hearing from you!