Imagine if contracts and insurance policies were not written by lawyers, we might not be able to use wonderful words like subrogation. This legalese term can be defined as the substitution of one person for another to fight for a right or claim. When looking at subrogation in context of an insurance policy, it states that your carrier has the right to recover any damages that were paid to you, but were the fault of another party.
The simplest form of subrogation occurs with auto accidents. Let’s say you are stopped a red light and are rear-ended by another driver, you submit the property damage claim to your auto insurer and they pay to have your car fixed. Since you were not at fault for this accident, your insurance carrier subrogates on your behalf to collect payment from other driver’s insurance policy. This is all done behind the scenes without you ever getting involved.
A common request in design contracts is the waiver of subrogation, which eliminates the right of your insurance carrier to recover any damages from your client. As long as this request is confirmed in a contract, prior to any losses, most (but not all!) insurance carriers will honor this request.
Since design professionals have to carry additional coverages, it is important to work with an insurance broker that understands the intricacies of the insurance polices and whether or not this waiver is in breech of the General Liability, Commercial Auto, Employer’s Liability and most important Professional Liability insurance policies.