Anti-Subrogation Rule

The anti-subrogation rule is a common-law doctrine that prohibits an insurer from exercising subrogation rights against a party who qualifies as its own insured under the same policy. Normally, after an insurer pays a claim, it may "stand in the shoes" of the insured and sue the at-fault third party to recover what it paid. The anti-subrogation rule carves out an exception: the carrier cannot recover from a person or entity it is also obligated to protect, because doing so would let the insurer pass a covered loss back onto its own insured and create a conflict of interest.

For a small-business owner, this rule quietly protects you and anyone you have added to your coverage. If you name a client, landlord, or subcontractor as an additional insured, your carrier generally cannot subrogate against that party for a loss the policy covers — they are now an insured too. This is one reason additional-insured status is so valuable to upstream parties: it not only extends defense but also blocks your insurer from later coming after them. It works alongside a waiver of subrogation, which contractually gives up recovery rights that the anti-subrogation rule might not otherwise reach.

A practical nuance: the rule's reach depends on who counts as an insured for the specific loss and coverage at issue, and states apply it differently. An insurer may still subrogate against an additional insured for exposures outside the scope of the coverage granted to them. The doctrine also interacts with the cross-liability question of whether co-insureds can pursue one another. When drafting contracts, do not rely on the anti-subrogation rule alone — pair it with an express waiver of subrogation so recovery rights are clearly and enforceably surrendered.