Subrogation law, with Insurance, is constantly being used. It is part of nearly every insurance contract. The courts are loaded with lawsuits involving the negligence of a third party and subrogation claims. This is why, as an injured party, you must seek out a subrogation lawyer. Insurance subrogation is a much more difficult and complicated process. Again in the simplest terms, if you are involved in an accident and there are medical bills or damage to your property. Your insurance company will see to it that the bills are paid. After making the payments or sometime before, your insurance company will try to determine more details about the injuries or damages that occurred.
For example, imagine a painting contractor fell off his ladder while they were on the job. However, when the painter fell, he toppled on top of another contractor’s employee on the job site. This other contractor’s employee suffers injuries from the collision, and the injured worker sues the Painting contractor as well as the project owner. The project’s contract included a requirement that the contractor assumes the owner’s liability for any accidents that may result from the contractor’s work. As a result of this, the contractor’s general liability insurance company pays the injured worker for both the owner and contractor’s portions of the damages incurred. After evaluation from the Insurance company, they were able to determine that the owner was actually twenty percent responsible for the accident. The insurance, in turn, files a claim with the owner to request a return on a portion of the initial payment made.
Although this may seem unfair, this is a completely legal and normal instance of subrogation with Insurance companies. To avoid this scenario, many project owners and general contractors require that their subcontractors agree to a waiver of subrogation. Subrogation ultimately holds the person who should pay for the damage responsible and will protect the company from being liable for unexpected expenses.
To save money and ultimately not be held responsible when the unexpected occurs, owners and general contractors often transfer their liability to subcontractors. This is why most contracts include a waiver of subrogation agreement. These contracts, in turn, have the subcontractor promise not to pursue legal action and request payment from the other party in case of an accident. That agreement often links with the subcontractor’s insurance company, depending on the type of policy and its terms.
Types of Liability Contracts and Policies
1. Commercial General Liability Policy:
Traditionally, a commercial general liability policy prevents the policyholder from being able to adjust the insurance company’s rights after the accident occurred. This only applies when a waiver of subrogation was signed and agreed to before a loss holds the company responsible for recovery. The subrogation policy oftentimes protects the other party if in the agreement it lists the person as an additional insured. Under common law, an insurance company may not subrogate against its own insured. To remove any doubt, one should ask the company involved to add an amendment applying a waiver of subrogation to the person or organization named in the initial contract. Insurance companies vary on the amount of premium they charge for this. Insurance companies sometimes make no charges at all.
2. Standard Business Auto Insurance Policy:
The standard business auto insurance policy has many similarities to the general liability policy. One major difference is that unlike General Liability insurance, there is no standard waiver of subrogation endorsement for auto insurance. Some insurance companies may offer their own versions of such an endorsement. Again, premium charges will vary.
3. Worker’s Compensation Policies:
Workers’ compensation policies require an endorsement whenever a waiver of subrogation is desired. This endorsement may apply on a blanket basis to all parties with whom the insured has written contracts requiring waivers. It also can apply only to the party listed on its schedule. The insurance company may charge up to two percent of the policy premium for blanket coverage or two to five percent of the project’s premium for individual coverage.
4. Commercial Property and Inland Marine Insurance Policies:
These types of policies vary as to whether they permit waivers of subrogation even before a loss. This type of coverage is imperative if you plan to transport high-value products or materials, which are often excluded from basic property coverage.
When working with a contractor, it is wise to have a contractor or building tenant who is required by contract to check the relevant insurance policies and waiver before agreeing to work together. This is when it is wise to have a lawyer such as Stephen Barker to work with you to complete the best waiver for you and your contractor that protects you for incidental charges and recoveries. Accidents happen, and it is best to protect yourself from the unexpected and to ensure that the proper coverage is in place. Call Stephen Barker Law today to create the best waiver for you and your contractor!