What does a waiver of subrogation prevent?

A waiver of subrogation is a provision in an insurance policy that prohibits the insurer from seeking recovery from a third party that may be responsible for a loss suffered by the insured. This means that if the insurer pays for a loss, they cannot then pursue the third party for reimbursement or damages. This is an important feature in many contracts, especially in commercial insurance, as it helps maintain good relationships between business parties by removing the possibility of one party seeking compensation from another after an incident.

In scenarios where a waiver of subrogation is in place, the insured is essentially protecting both themselves and other involved parties from legal action that could complicate or prolong claims processes. By agreeing to this waiver, the insured ensures that the insurer will not attempt to recover costs from third parties, which might otherwise create liabilities or tensions among them.

The other options relate to actions that are not directly affected by a waiver of subrogation, which focuses specifically on the insurer's rights to seek recovery from third parties.