Subrogation (often referred to as “subro”) is a legal process that allows you (as the insured) and your insurance company (the insurer) to quickly pay for recovery costs following a covered accident or loss—such as medical expenses, property cleanup and restoration, or automobile repairs—and then recover some or all of those costs from another party (and their insurer—known as a third-party carrier) who was at fault for the accident or loss. In that case, your insurer is said to “subrogate” the other party’s insurer by “stepping into your shoes” and pursuing the claims you have against the party who caused the accident or loss (in whole or in part).

In other words, subrogation refunds you and your insurer for the expenses incurred following a covered accident or loss—including your deductible. Your insurer will probably do most of the work to subrogate against the other party’s insurer, and you, as the insured policyholder of the insurer seeking to subrogate or recover expenses paid, will only need to cooperate by providing information.

Waiver of Subrogation

A waiver of subrogation or subrogation waiver is an agreement that prevents your insurer from acting on your behalf to recover expenses from the party who was at fault for the covered accident or loss.

A waiver of subrogation usually comes into play when the party who was at fault (in whole or in part) for your accident or loss wants to settle your claims against them without involving your insurer. In that case, the at-fault party will usually ask you to release all claims you have against them in exchange for the settlement payment, and to waive any subrogation rights you and your insurer may have.

It is usually a good idea to have a lawyer review any waiver of subrogation agreement or settlement agreement another party asks you to sign following an accident or loss. You should also review your insurance policy to determine whether it allows you to waive your insurer’s subrogation rights.

In California, subrogation allows an insurance company to pursue a third party that caused an insurance loss to the insured. This is done to recover the amount of the claim paid by the insurer to the insured for the loss. Subrogation occurs after the insurer has paid out the insured's claim for damages, and it effectively steps into the shoes of the insured to seek reimbursement from the at-fault party or their insurer. The insured is typically required to cooperate with their insurer in the subrogation process by providing necessary information. A waiver of subrogation is a clause in a contract where the insured agrees to limit the rights of their insurer to recover the loss from the party at fault. In California, such waivers are often included in contracts and insurance policies, but they must be clearly and explicitly stated to be enforceable. It is advisable for an individual to consult with an attorney before signing a waiver of subrogation, as it affects the rights of recovery for both the insured and the insurer. Additionally, policyholders should review their insurance policies to understand any restrictions or permissions regarding waiving subrogation rights.