Waiver of Subrogation

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Real-Life Claim Scenario: McCoy, Malbec & Frye CPA firm held its annual client appreciation party at the American Bank Tower. To rent the facility, the CPA firm was required to sign a rental agreement. The agreement required the CPA firm to have a $1M Event Liability policy with a Waiver of Subrogation Endorsement. McCoy purchased Event Liability insurance but neglected to make sure it included the required Waiver of Subrogation Endorsement. As part of the rental agreement, the facility owner was also to provide the catering. The event went off without a hitch, until the next day, when several guests had to visit the emergency room for treatment of food poisoning.

When the effected guests filed a class action lawsuit in the amount of $78,000 against McCoy, Malbec & Frye (event holder), the insurance carrier paid the claim and then subrogated (sought reimbursement) against the facility owner. At that time, it was discovered that the representative for McCoy, Malbec & Frye had signed a rental agreement that required a Waiver of Subrogation Endorsement, which was never purchased. Unfortunately, this was a costly mistake and McCoy, Malbec & Frye (event holder) were held liable for the $78,000 payment on behalf of the facility owner.

Estimated cost with Waiver of Subrogation: $25
Estimated cost with NO Waiver of Subrogation: $78,000

A Smart Solution:
RVNA Waiver of Subrogation Endorsement option

Waiver of Subrogation is an optional endorsement available when purchasing Event Liability Insurance. It is needed if a rental agreement requires such an endorsement. When a Waiver of Subrogation Endorsement attaches to an Event Liability Insurance policy, the insurance carrier cannot seek restitution from a third party. Without a Waiver of Subrogation, your insurance carrier may choose to sue a third party to recover the amount of a claim paid if the loss was caused by that third party — this is called subrogation. Some facility rental agreements, such as the one in the case above, require you to waive your right of subrogation – and therefore your insurance company's rights – against the facility owner in the event of a claim.

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