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Commercial Property Insurance and Waiver of Subrogation: Here’s What You Should Know

Commercial Property Insurance and Waiver of Subrogation Here’s What You Should Know

Apr 06, 2023

Commercial Insurance

A waiver of subrogation in commercial property insurance states that if two companies go into business with one another or form a partnership, both give up the right to file a lawsuit against the other if they default or fail to follow through with their obligations. A waiver of subrogation in commercial property insurance details what can and cannot be done by either party. It also turns the option of litigation over to the insurance carrier.

What You Should Know

There are certain forms that allow you the right to sue a business partner or neighboring business, or you can allow your insurance company that option. With a waiver of subrogation in commercial property insurance, you forgo that right, and it automatically transfers to your insurance carrier.

Protecting Your Subrogation Rights

As a business owner, you can't absolve another company's liability on your own. Commercial property insurance requires business owners to protect their rights to subrogation. This is why having a subrogation waiver is so important when you manage a business.

Permitted Waivers

Subrogation clauses allow you to give up your rights to sue prior to incurring a loss. After a loss occurs, you still have the option to waive your rights under specific circumstances. This includes companies insured under the same policy you control or a tenant.

Mutual Waivers

A mutual waiver means that both parties involved in the partnership waive their rights to file suit against the other. This will normally only apply to losses already covered by the partnership's property insurance policy. Mutual waivers are beneficial in a few ways and will ensure both sides receive the same consideration.

Unilateral Waivers

Unilateral or one-sided waivers are usually placed between a landlord and a tenant. This prevents the tenant from filing a lawsuit against their landlord if their property is damaged. It does allow the landlord to sue the tenant, however. Tenants should look for these waivers and try to avoid them whenever possible.

Construction Projects

A waiver of subrogation in commercial property insurance for construction projects is meant to protect both the property owner as well as the contractor. While construction projects don't necessarily constitute a partnership, the contractor and the property owner must work together to ensure the project's outcome is successful.

The Bottom Line

Having a waiver of subrogation in commercial property insurance ensures that both entities in a partnership won't sue one another after a loss. It becomes the insurance carriers' right to pursue litigation if they choose.

Protect Your Subrogation Rights with Commercial Property Insurance at Kneller Insurance Agency

Have questions about waivers and endorsements commonly found in commercial property insurance? You need to contact the professional agents at Kneller Insurance Agency. We specialize in a variety of commercial insurance policies and are always available to help you get the insurance coverage you need for peace of mind. Contact us today to get all of your questions answered.

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