A workers comp question asked today…
Waivers of subrogation and their effects are seldom understood. When it comes to insurance transactions an insurance company is allowed to subrogate against or pursue it’s rights to re-coup damages it has paid against a third party for damages which the third party they may have caused. You see in an insurance policy the insured or client of the insurance company gives over to the insurance company it’s right to recover from another party damages it may have had to pay in response to coverage provided in a policy. Under a waiver of subrogation the insured or client agrees to waive the rights of the insurance company to recover. In really simple terms this is called a waiver of subrogation.
Each state has their own application and interpretation of waivers of subrogation. Check each individual state workers compensation rules to find out how they may apply in your state.
Most individual state workers compensation statutes allow, in some form or another, an employer and insurer to waive its right to subrogate against another who may have caused an employees injury. However some states, like Missouri and Kentucky, do not allow waivers of subrogation for workers compensation. Usually the states not allowing waivers of subrogation have deemed them to be against public policy. You’ll also find that many of the states allowing waivers require an endorsement to the workers compensation policy or some other means of consent from the insurance company in order for the waiver to apply.
Be sure to check with your state to make sure workers compensation waivers of subrogation are allowed. And if you are a contractor, be sure to read and understand the contract you are signing.
Hope this helps out!