Buildings insurance—subrogation rights and waivers
Buildings insurance—subrogation rights and waivers

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Buildings insurance—subrogation rights and waivers
  • The principle of subrogation
  • Subrogation in relation to leases
  • Waiver
  • Is an express waiver actually needed?

The principle of subrogation

Subrogation is the right of an insurer, once it has made payment to its insured for loss covered by an insurance policy, to ‘step into the shoes’ of the insured and to exercise any rights or remedies which the insured has against the person who caused the insured to suffer that loss.

Most insurance policies contain an express right of subrogation, but one will be implied if necessary in order to do justice or prevent unjust enrichment. Although subrogation is, in principle, only available where the insured has been paid in full, it is common (either under the terms of the insurance policy or by separate agreement) for the insurer and the insured to agree that the insurer can bring a subrogated claim in the insured’s name even if the insured has not yet been fully indemnified.

Subrogation in relation to leases

In principle, where:

  1. a landlord suffers loss as a result of an act or default by one of his tenants (or by anyone for whom the tenant is responsible), and

  2. the landlord is insured against that loss

the landlord is entitled to claim under the insurance policy and leave the insurer to recover from the tenant the amount which it has paid out to the landlord.

Waiver

Against that background, a tenant will