What Is the Purpose of a Waiver of Subrogation Form?


Quick Answer

A waiver of subrogation when included in a contract prevents a claimant to pursue a claim against a party who has been responsible for a loss to the claimant. In other words, a waiver of subrogation prevents the one who agreed to the waiver any rights to collect restitution from the party responsible for the damage for injury.

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Full Answer

An example of subrogation may help clarify the situation. Consider an insurance company and a homeowner. In the insurance policy, a contract the homeowner signs with the insurance company, there will generally be a section titled, "TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US", or similarly worded. This means that if someone were to cause damage to the homeowners property, to the extent the homeowner was to recover damages for his loss, that recovery would go to the insurer and not the homeowner. Consider the following scenario. A homeowner has someone damage his property. The homeowner is insured and makes a claim to his insurance company. His insurance company pays the claim. Now at some future time the homeowner receives compensation for damages from the party who caused the damage. It seems reasonable that these funds should be returned to the homeowners insurance company which has compensated the homeowner for his loss.

There is one other fact about waiver of subrogation that should be noted. A waiver of subrogation can waived before a loss or after a loss. This condition generally involves property losses.

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