Subrogation
Definition. Subrogation is the right of your insurer, after paying a claim on your behalf, to step into your shoes and pursue recovery from the third party who actually caused the loss.
Also known as: Right of Recovery
If a third party's negligence caused the loss your insurer paid, the insurer can sue that party to recover what it paid. Subrogation is automatic under most policies unless contractually waived (see Waiver of Subrogation).
Commercial leases and contracts often require both parties to waive subrogation against each other — preventing insurers from suing each other after settling a claim with their respective insureds, which would otherwise turn a single covered event into multi-party litigation.
Example
Tenant's property damaged by leak from upstairs unit. Tenant's insurer pays the claim, then subrogates against the upstairs unit's owner (or their insurer) to recover. With a mutual Waiver of Subrogation in the lease, this recovery path is blocked.
Sources cited
Need subrogation coverage?
Compare quotes from 10+ commercial insurance carriers in 5 minutes. Free, no contact info required.
Get My Quotes →Disclosures
📘 Educational content only.
Reviewed by California-licensed Property & Casualty insurance agent
Jason Wootton (CA License #0I94454). Not insurance advice, an individual recommendation, or a solicitation in any state. Insurance regulations vary by state. For specific coverage decisions, consult a licensed insurance agent in your state.
Advertiser disclosure.
Get Business Coverage is a licensed insurance referral service. We may receive
compensation when you click links to carrier partners or complete a quote. This
compensation may impact how and where products appear on this page, but it does
not influence our editorial content or research methodology.