Subrogation

What You Need to Know

When your insurance company pays your claim, they step into your shoes legally and can pursue whoever was actually responsible for the loss to recover what they paid. For example, if a defective oven causes a fire in your kitchen, your property insurance pays your claim immediately so you can rebuild — then your insurer sues the oven manufacturer to recover the payment.

You must cooperate with subrogation efforts by providing documentation, testimony, and access to evidence — but you don't control the process or receive any recovered money beyond your deductible.

Why It Matters for Restaurant Owners

Subrogation helps control insurance costs industry-wide by making responsible parties pay for the damage they cause. It also means you get paid quickly even when someone else caused the loss — your insurer handles the lengthy process of pursuing the responsible party.

However, commercial leases typically require you to add a "waiver of subrogation" endorsement preventing your insurer from suing your landlord. This protects your landlord relationship but shifts more risk to you, so ensure your property coverage limits are adequate since you've eliminated one potential recovery source.

Never interfere with your insurer's subrogation rights — this could violate your policy. If you need to waive subrogation for a landlord or client, request it as a formal policy endorsement rather than signing contractual waivers without involving your insurer.