Many contracts, including lease agreements, contain provisions for one party to waive its rights of recovery against another. Such provisions are commonly known as “waivers of subrogation.”
Many, but not all, property and general liability policies allow an insured to waive his/her rights of subrogation as long it is done in writing and prior to a loss. In the areas of Inland Marine, Ocean Marine, and Workers Compensation insurance, you must have the carrier’s permission to do this without jeopardizing your coverage.
The implementation of waivers of subrogation can be an excellent risk management technique, but the following rules should be followed:
Rights of subrogation should be waived only to the extent that there is insurance recovery.
The best waivers are usually mutual waivers that benefit both parties.
Keep in mind, however, that this is a complex subject and you should not implement any waiver of subrogation until your insurance representative has confirmed that the pertinent coverages will still be there to operate to your benefit when needed.