What is a Waiver of Subrogation?

A waiver of subrogation is a provision in an insurance policy that waives the insurer’s right to seek recovery from a third party for damages paid out to the policyholder. Subrogation is the legal right of an insurance company to pursue a third party for damages that the insurance company has paid out to the policyholder.

For example, if an employee is injured on the job and the employer’s workers’ compensation insurance policy pays out benefits to cover the employee’s medical expenses and lost wages, the insurance company may have the right to seek recovery from the party responsible for the employee’s injury (such as a manufacturer of defective equipment).

A waiver of subrogation allows the insurance company to waive this right and agree not to seek recovery from the third party. This can be beneficial for the policyholder because it means that the policyholder will not be required to repay the insurance company for the benefits paid out. It can also be beneficial for the third party because it means that the third party will not be pursued for damages by the insurance company.