WAIVERS OF SUBROGATION
In the complex world of construction and design, professional contracts are very important to both successful projects and limiting potential claims against design professionals. These agreements outline all parties’ responsibilities, expectations, and legal obligations. Amongst the many clauses and provisions in these contracts, the “waiver of subrogation” clause stands out as a critical element, often overlooked by those not well-versed in construction and insurance law.
Subrogation as a Whole
Subrogation is a legal doctrine that allows one party (typically an insurer) to take over the role of another party (usually an insured) and pursue claims or legal action against a third party responsible for causing harm or damage. In the context of construction and design contracts, subrogation often arises when an insurer pays a claim on behalf of its insured for damages incurred during a construction project. After paying the claim, the insurer may seek to recover the amount paid by pursuing a legal claim against the party responsible for the damages.
The Role of Waivers of Subrogation
A waiver of subrogation is a contractual provision that effectively prevents insurers from pursuing subrogation claims against the parties involved in a construction project. The primary purpose of including waivers of subrogation in design professional contracts is to allocate risk and liability. Furthermore, these waivers are commonly included to protect all parties from costly and time-consuming legal disputes over damages that were covered by insurance.
Implications for Design Professionals
For design professionals, there are several benefits to waiving subrogation rights. By including such a clause in their contracts, design professionals can help avoid potential litigation from subrogation claims initiated by their clients’ insurance companies. Instead, any insurance claims related to the project’s design covered by other parties’ first party insurers will most likely not lead to a claim against the design professionals.
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