What is waiver of subrogation?

When you read your insurance policy documents, you may come across the term ‘waiver of subrogation.’ This is one of those ‘insurance-y’ terms that it’s helpful to understand. 

What is subrogation?

In the context of insurance, subrogation is when your insurance company, after paying a loss, inherits your right to recoup its payment from another party, if that party is also partially responsible for the loss. 

For example, suppose you are a marketing consultant, and you and your client are sued for copyright infringement. A judgment is awarded that requires your insurance company to pay in full in order to release you from the claim. If the client was also partially responsible for the loss, you would have the right to recover the part of the loss that was your client’s fault. 

Since your insurance company paid the full amount of the claim on your behalf, they now inherit your right to recover that portion of the loss. Your insurance company can seek to recover damages from your client or their insurance company. 

What does it mean to waive your right of subrogation?

A waiver of subrogation relinquishes your right of subrogation. Clients may want your business to waive your right of subrogation so they will not be held liable for damages if they are partially responsible for a loss. When you waive your right of subrogation, your business (and your insurance company) are prevented from seeking a share of any damages paid. This eliminates potential conflicts between you and your client.

How do I obtain a waiver of subrogation?

A waiver of subrogation can typically be accommodated on Hiscox policies. However, it increases our exposure, since you are giving up your right to recover any losses from your client(s). Therefore, your premium may increase with a waiver of subrogation. You’ll want to factor in any premium increase when determining the price you charge your client for your work. 

Why choose Hiscox for your waiver of subrogation request?

We’ll work with to fully understand your waiver of subrogation request and the risk that is being undertaken. 

You can request a waiver of subrogation for your policy online, or call us at 1-888-202-3007, Mon-Fri, 7am – 10pm ET and speak to a licensed agent.