In what situation is a subrogation waiver typically applied?

A subrogation waiver is typically applied when the insured has been fully compensated for their loss. In the context of insurance, subrogation refers to the insurer’s right to pursue recovery from a third party responsible for the insured's loss. When a subrogation waiver is in effect, it means that the insurer agrees not to seek recovery from the third party once the insured has been compensated.

This situation is particularly relevant in cases where the insured has received full payment for their claim and, as a result, has no further need to pursue any additional damages. In such cases, waiving the right to subrogation helps maintain a good relationship between the insurer and the insured while preventing complexity in handling third-party claims. It also limits the insurer's involvement in recovering costs from others, which can streamline the claims process for the insured.

In contrast, the other scenarios do not typically involve a subrogation waiver. A deductibility clause refers to the portion of a claim that the insured must pay before insurance coverage kicks in, which does not relate to waiving subrogation rights. A situation where the insurer is seeking recovery from a third party directly contradicts the concept of a waiver, as recovery efforts imply the insurer is asserting its subrogation