If you’ve ever spotted the term “subrogation waiver” (sometimes shortened to sub waiver or waiver of subrogation) in your insurance documents and wondered what it means, you’re not alone. It’s a technical term that plays a big role in how claims are handled – especially in the classic motor trade sector, where vehicles can be worth millions.
Let’s break it down.
What is subrogation?
Subrogation is the process that allows an insurer to recover money from a third party who caused damage. Here’s how it works:
- Your insurer pays out for a claim
- If someone else was responsible for the damage, your insurer can pursue them (or their insurer) to recover what they paid you
This protects insurers – and ultimately policyholders – because it helps keep premiums lower and ensures claims are settled quickly.
So, what is a subrogation waiver?
A subrogation waiver is an agreement that prevents your insurer from trying to recover money from a third party after paying your claim. In other words, your insurer gives up their right to seek reimbursement.
If you sign a waiver of subrogation, you’re agreeing that your insurer cannot pursue the party at fault – even if they were negligent.
How does it work in practice?
Imagine this scenario:
- You’re involved in a car accident, and the other driver is at fault
- Their insurer wants to settle directly with you, without involving your insurer
- They ask you to sign a waiver of subrogation
If you sign, your insurer cannot recover costs from the other party. This might sound harmless, but it can have serious consequences for your policy and claims record.
Why would an insurer object?
Insurers rely on subrogation to recover costs when they pay out on claims that weren’t your fault. For example:
- You prefer to deal with your own insurer for repairs
- Your insurer pays upfront, then recovers costs from the negligent party
- This process often reimburses your excess too
If you sign a waiver, your insurer loses that right – and you could end up with a claim on your record that might have been recoverable.
Why might you be asked to sign one?
In the motor trade, waivers often come up when:
- A customer’s insurer wants to avoid involving your insurer
- A garage or third party wants to simplify settlement
Howden’s advice
First and foremost, think very carefully before agreeing. Most of the time, it’s not in your best interest. Always speak to your insurer first – signing without consent could even void your policy.
At Howden Classic Motor Trade, we deal with these situations every day. Our team can:
- Explain what a waiver means for your business
- Review your insurance terms and any proposed agreements
- Ensure you stay protected and compliant
It’s our business to protect your business – and make complex insurance simple.
Call our Classic Motor Trade team on 01252 888 546 for a no-obligation review.