As an Ontario business owner, you may have come across the terms “waiver of subrogation” and “certificate of insurance” during contract negotiations or when securing a new client. Both play crucial roles in managing risk and ensuring that your business is adequately protected.
In this blog, we’ll demystify these concepts and explain their significance.
What is a Waiver of Subrogation?
A waiver of subrogation is a provision typically included in a contract or insurance policy that prevents your insurance carrier from seeking recovery from a third party who may be responsible for a loss. Here’s how it works:
- Subrogation Rights: Typically, if your insurer pays a claim on your behalf, they acquire the right to “step into your shoes” and pursue any third party that caused the loss to recover the amount paid.
- Waiver of Subrogation: By including a waiver of subrogation clause, you agree that your insurer will not take legal action against the third party. This can sometimes be a condition of doing business with certain clients or partners.
Why a Waiver of Subrogation Matter
Waivers of subrogation can simplify contractual relationships by reducing the potential for litigation between partnering entities. They provide peace of mind to your clients or contractors, knowing that they will not face a lawsuit from your insurance company in the event of a claim. However, agreeing to this clause can be risky and should be carefully considered:
- Risk Transfer: By waiving subrogation rights, you are essentially absorbing the risk that might otherwise be transferred to another party.
- Potential Costs: Additional premiums may sometimes be involved with waivers of subrogation. So it’s important to factor these into your decision.
Certificates of Insurance: Your Proof of Protection
A certificate of insurance is a standardized document that provides a summary of your insurance policies. It serves as evidence that your business is covered and details the essential aspects of your policy. For example, the types of coverage, policy limits, and the policy period.
Why Certificates of Insurance are Essential
- Contractual Requirements: Many clients or landlords require certificates of insurance before they will enter into an agreement with your business.
- Risk Management Tool: Certificates of insurance ensure that all parties are aware of the insurance policies in place, promoting transparency and trust.
How Your Broker Can Help
Navigating the intricacies of waivers of subrogation and certificates of insurance can be overwhelming. Fortunately, you don’t have to become an expert—that’s what we’re here for.
Don’t let complicated insurance jargon hold you back. If you’re unsure about a waiver of subrogation clause reach out to us today. We’re here to ensure you have the right coverage in place, so you can focus on what you do best—running your business.
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