This special section of Private Practice News introduces important concepts and issues affecting both clients and engineers. The following article explains the complexities of subrogation as well as the benefits of a waiver of subrogation. By Kevin R. Sido Hinshaw and Culbertson, Chicago, Illinois Property insurance covers accidental events such as fires, storms, and the like. The risk of financial loss for such damage caused by the accidental events is transferred from the policyholder to the insurance carrier.
Premiums compensate the carrier for undertaking the risk.
To the extent the policyholder has shifted the risk of loss by insurance, that policyholder has been made whole. Yet, once made whole, the policyholder has no reason or standing to be reimbursed again, even if some human agency was partially to blame for the insured loss. In legal terms, that's called subrogation. Subrogation is a common concept in property insurance for buildings under construction, automobile accidents, or the like. If successful in its claim against the persons responsible for the loss, the insurance company need not and does not share its own proceeds with its insured, whose reimbursement by the insurer allowed the insurer to pursue the responsible parties.