Definitions
In legal terms, subrogation gives a party the right to act on behalf of a second party in order to bring a claim for damages. It is a right of reimbursement to the insurance company responsible for paying for repairs. Not all claims can be subrogated. The most common form of subrogation is used in claims of property damage.
A waiver has several legal contexts. Overall, it is the act of one party surrendering their legal rights. This act can be statutory, constitutional or contractual. The court will review a claim of waiver, determining if the rights are being given up voluntarily.
How Subrogation May be Applied
Insurance providers regularly provide subrogation services. If you were in an auto accident and no one was hurt, but the cars were damaged, and you were not at fault, your policy will cover repairs. In most states, the insurance company covering the damages can take advantage of subrogation. In essence, the insurance company can makes a claim against the other driver – a claim you could have made – holding them responsible for any compensation. Most likely, the insurance company will approach the other driver’s insurer for compensation. They will even have the option of taking the opposing parties to court in your name. In fact, in many states, that suit can be filed in your name.
When there is a waiver of subrogation in a contract, it is there to minimize claims and lawsuits among parties. Under these conditions, the above referenced scenario would not be possible. The waiver leaves risk of loss with the insurance companies and cost of coverage is allocated among parties. Once assigned to insurers by involved parties, the risk stops there with no room for insurance companies to seek from any parties considered responsible for the incident.
A Brief Case Example
A real world example of subrogation rights involves a Missouri insurance company that wanted to sue parties involved in a building retrofitting after a portion of the new roof collapsed. The insurer believed it had subrogation rights. In court, it was determined the owner’s rights were waived. On appeal, the Missouri Supreme Court ruled the intent of all parties had to be based on contract documents and general conditions needed to be read together. Under those circumstances, the court ruled the building owner had waived their rights and so had the insurer. The Supreme Court noted the waiver of subrogation was powered by contract clauses based on the contractor purchasing and maintaining insurance for damages. An Ohio accident attorney can help you understand your subrogation rights in regards to your accident. Speak with one today.