Construction contracts frequently include a provision calling for a contractor or subcontractor to waive subrogation rights. If such a waiver remains in a contract, the party providing the waiver strips its insurance carrier from potentially recovering payment for the claim.
Given the frequent inclusion of waivers of subrogation in construction contracts, it is important to understand the legal concept of subrogation and potential effect of a waiver of subrogation clause. However, these waivers may vary and how to approach them depends on how a waiver may be applied in the future.
What is subrogation?
In its simplest form, subrogation is the right of one party to "stand in the shoes" of another party to enforce the first party's rights by bringing a legal claim. When discussing subrogation, specific terminology often is used to describe the parties and concepts involved. The "subrogee" is the party that seeks to enforce the rights of another party through subrogation. The "subrogor" is the party whose rights are being enforced by the subrogee.