Subrogation means, in a legal sense, one party has the right to “step into the shoes” of another party for the purposes of bringing a claim for damages. Not all types of claims may be subrogated. The most common type that can be subrogated is property damage claims.
Example: Joe is an electrician insured by BIG Insurance Company. He is hired by Amusement Park World to replace light bulbs in the parking lot for the park’s opening in the Spring. Amusement Park World requires Joe to sign a Waiver of Subrogation stating that BIG Insurance Company will not be able to recover (from Amusement Park World) any money paid for damages to Joe’s truck if he hits any of the huge potholes in Amusement Park World’s parking lot (a claim for which they would normally be liable).
A waiver of subrogation clause is placed in a contract to minimize lawsuits and claims among the parties. The result is that the risk of loss is agreed among the parties to lie solely with the insurance company. The risk, once assigned to the insurers (insurance companies) by the parties, is determined to stop there, without allowing the insurer to seek redress (legal cation) from any party who may be “at fault” for the loss/claim. In order to add a Waiver of Subrogation to your insurance policy, you will either need to state the number of parties with whom you have such agreements, or you may purchase a blanket waiver of subrogation that will apply to all entities with whom you have a contract with a waiver of subrogation clause.
Insurers have also begun to refer to the “Waiver of Subrogation” as a “Waiver of Transfer of Rights,” or in its full form, a “Waiver of Transfer of Rights of Recovery Against Others To Us.”