A 'waiver of subrogation' is an agreement within an insurance policy where the insurer gives up the right to seek reimbursement from a third party responsible for a loss suffered by the insured. In simpler terms, if you file a claim and your insurer pays out, they usually have the right to sue anyone who caused the loss to recover their costs. A waiver of subrogation prevents this, meaning your insurer can't pursue compensation from the third party after settling your claim.

For instance, you own a roofing franchise, and a subcontractor accidentally causes damage during a job. Normally, if your insurer pays for the damages, they could then sue the subcontractor to recover those costs. However, with a waiver of subrogation in place, your insurer agrees not to pursue this recovery. This can be crucial for maintaining good business relationships and avoiding legal entanglements.

Having a waiver of subrogation can:

• Promote harmony and reduce legal disputes between contractors and clients.
• Provide clear financial responsibilities in case of a loss.
• Foster a more collaborative business environment.