What is ‘waiver of subrogation’?

Waiver of subrogation refers to an agreement in which an insurer relinquishes its right to pursue recovery of the claim payment from a third party that may be responsible for the loss. Essentially, it means that if the insurer pays a claim to its insured, the insurer cannot go after the responsible party to collect that amount. This can be particularly beneficial in contracts and agreements, as it helps maintain a good relationship between parties involved by avoiding disputes over liability.

For instance, in many commercial contracts, businesses might agree to waive subrogation rights to prevent claims against each other after a loss occurs. This approach can promote cooperation and reduce litigation costs since each party absorbs their own losses without seeking compensation from the other.

The other options describe different aspects of insurance that are less directly related to the concept of waiver of subrogation. The second option pertains to claims processing, while the third regards coverage specifics, and the fourth deals with policy types for certain operators, none of which align with the principle of renouncing the right of subrogation.