Sunday, February 20, 2011

Waiver of Subrogation

Many leases contain a "waiver of subrogation" clause. This clause relates to insurance. First, let's understand what subrogation is. Many insurance policies allow for the insurance company to seek reimbursement from a third party for claims made by the person they insure. In other words, if the insured individual makes a claim as a result of a loss caused by a third party, the insurance company would pay that claim to the insured. Subrogation allows the insurance company to then pursue that third party in order to get reimbursed for the cost of the claim paid to the insured individual. This action would be taken on behalf of the insured individual.
A waiver of subrogation would disallow the insurance company from taking such action and pursuing the third party.

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