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Posted on 05/22/2023

Commercial Property Insurance: Understanding the Waiver of Subrogation for Ultimate Protection

Commercial Property Insurance: Understanding the Waiver of Subrogation for Ultimate Protection

Commercial property insurance is a vital safeguard against financial loss resulting from damage or loss of business property. The terms and coverage of each policy vary, making it essential to understand the nuances of your specific insurance agreement. One crucial aspect to consider is the waiver of subrogation, which can significantly impact your rights in case of property damage. In this article, we will delve into the concept of the waiver of subrogation, its types, and why it is crucial for your commercial property insurance needs.

What Is a Waiver of Subrogation? 

A waiver of subrogation is a clause within your commercial property insurance policy that restricts your ability to sue a negligent party for property damage. Imagine a scenario where you occupy a unit in a commercial apartment complex, and an incident occurs, leading to damage in neighboring units. If your neighbor’s negligence, such as leaving their faucets open, causes their team to flood and damages your belongings, you might seek compensation. However, if your policy includes a waiver of subrogation, your insurance company would compensate you and pursue the negligent party independently, preventing you from suing them directly.

Types of Waivers of Subrogation in Commercial Property Insurance 

As property-related litigations are expected to rise in the coming months, due in part to inflation and increased fraud in the real estate industry, having a waiver of subrogation becomes even more crucial. Let's explore the different types of waivers:

  1. Mutual Waivers: This type of waiver mutually prohibits two parties from suing each other in the event of damage to commercial property. Instead, the insurance company takes responsibility for compensating any losses incurred. For instance, a landlord and a property management company may enter into a mutual agreement, known as a waiver of subrogation, that prevents them from suing each other directly.
  2. Unilateral Waivers: With a unilateral waiver, only one party is restricted from suing the other. For example, a landlord can utilize this waiver to prevent tenants from filing lawsuits. However, the landlord retains the right to sue the tenant if property damage occurs.
  3. Permitted Waivers:This type of waiver is not universally applicable. Instead, it allows the policyholder and the insurance company to agree on specific areas of the policy that should be waived and for how long. For instance, you may waive your right to sue the other party during contract signing, after a loss, or under certain circumstances. The waiver of subrogation is typically relevant when dealing with the following entities:
    • A party covered under your property insurance
    • Tenants
    • A party that controls your business
    • A party under your control

Get Ultimate Protection for Your Business Property with Pierce Insurance Group 

Incorporating a waiver of subrogation into your commercial property insurance policy is paramount, particularly if you want to avoid the complexities of lawsuits. If you are seeking comprehensive small business insurance, including commercial property insurance in Texas, look no further than Pierce Insurance Group. We specialize in providing ultimate protection for your business property. Contact us today to ensure the security and peace of mind you deserve.

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