What does "waiver of subrogation" mean?

Prepare for the Kansas Property and Casualty State Exam. Use flashcards and multiple choice questions with hints and explanations. Get ready to ace your exam!

The term "waiver of subrogation" refers to an agreement whereby the insurer relinquishes its right to seek compensation from a third party after it has paid a claim to the insured. By waiving its subrogation rights, the insurer essentially agrees not to pursue recovery of the loss amount from any negligent party that may have caused the damages. This is often included in contracts or policies to facilitate smoother relationships between the parties involved, preventing litigation or claims disputes following an incident.

In practical terms, when an insurer pays out a claim to the policyholder for a covered event, they typically would have the right to pursue those responsible for causing the incident (the subrogation process). However, when a waiver of subrogation is in place, the insurer is barred from taking that action, ensuring that the policyholder is protected from potential legal repercussions or claims that could arise from the insurer's attempts to recover funds. This concept is significant in various types of insurance, particularly liability and property coverage, where multiple parties might be involved in a claim scenario.

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