What is Subrogation?

Subrogation is the legal right your insurance company has to seek reimbursement from third parties who were responsible for causing the loss after your insurer has paid your claim.

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. Your insurer then sues the oven manufacturer to recover the claim payment. Or if a neighboring business’s negligence causes damage to your restaurant, your insurer pays your claim and then pursues the neighbor’s insurance company for reimbursement.

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.

Subrogation is your insurer’s problem, not yours—let them handle recovery efforts while you focus on rebuilding your business.