There is a legal term that shows up throughout legal documents regarding real estate, personal guarantees and insurance.  The rights of subrogation are generally broken up into five different categories.  The first is regarding people’s debts, the right of subrogation allows a person who paid off another person’s debt to seek the repayment from that person.  There is another subrogation right which allows creditors of a trust to seek repayment from the beneficiaries of the trust if the trustee does not make payments.  In many examples, subrogation rights are a transfer of the right to sue someone to recoup losses.

The most important kind of subrogation is regarding an indemnity insurer, which allows an insurance company to seek financial recuperation from the party responsible for the insured’s payout.  For example, if a building which you own burns down due to the fault of another, you could sue to recoup your losses.  But, if you have insurance for that property, the insurance company will be able to pay for the damages.  But that also becomes subrogated to your possible lawsuit against the party at fault.  The right to seek payment from the negligent party becomes transferred to the insurance company.

For subcontractors, the waiver of subrogation is an essential item included in your insurance certificates before starting work.  This proves two things to the general contractor or employer.  The first is that the subcontractor has some sort of insurance program.  It is also in an attempt to negotiate the terms of an insurance policy held by the sub to result in the benefit of the contractor.  A waiver of subrogation prevents the insurer from pursuing reimbursement from the other insurer.

If a subcontractor’s worker is injured at a site, the subcontractor’s insurance will be hit with the worker’s compensation claim.  In positions were subrogation has not been waived, the insurance company can pursue the contractor as a party culpable for the injury.  As a contractor it is important to know the way to navigate through the pitfalls of insurance.  Reach out to a skilled insurance agent at Wise Insurance in Marin County today.