Waiver of subrogation

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Insurance insights 101 | What does a waiver of subrogation mean?

Clarity matters. That’s why we write about key insurance terms and share insights about what specific terminology actually means. Every wonder what a waiver of subrogation actually is? Well, it’s an agreement between two parties in which one party agrees to waive subrogation rights against another in the event of a loss.

The intent of the waiver is to prevent one party’s insurer from pursuing subrogation against the other party. Generally, insurance policies do not bar coverage if an insured waives subrogation against a third party before a loss.

However, coverage is excluded from many policies if subrogation is waived after a loss because to do so would violate the principle of indemnity.

What’s an indemnity?

According to IRMI.com, an indemnity is a restoration to the victim of a loss up to the amount of the loss. Here’s a brief explainer from our blog about what an indemnity is, how it works and what it might mean…

“Indemnity is often used as a synonym for compensation or reparation. All three can be construed as obligations to act on an injured party’s behalf given the occurrence of a contractually-specified event. However, indemnity as a legal concept has a much broader meaning than the other two terms; namely, an indemnity is to make a party to a contract “whole” again should that contractually-specified event occur.”

ALIGNED Insurance – Indemnity is the ALIGNED term of the day

Does it make sense to accept a waiver of subrogation?

It depends. To learn more about the potential impacts of accepting or imposing a waiver of subrogation, contact ALIGNED Insurance. An ALIGNED Advocate can provide expert guidance about insurance and risk management best practices for your organization.

Talk to one of our advocates today about how we can help you secure the best products, services and insurance solutions for your business.

Uniquely within the industry, all commercial insurance products and services that our team of brokers create, negotiate and deliver are designed to support the specific needs of Canadian business.

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