In what situation might a waiver of subrogation be useful?

A waiver of subrogation is particularly useful when one party intends to eliminate the insurer’s right to recover costs that it may otherwise claim from a third party who may be responsible for the loss. This situation often arises in contractual agreements where parties agree not to seek recovery from each other (or their insurers) for damages that occur, regardless of the cause. For example, in construction contracts, a contractor might require a waiver of subrogation from subcontractors to prevent their insurance companies from pursuing subrogation against the contractor in case of a loss, thereby fostering a more cooperative environment and minimizing disputes.

Other scenarios presented do not align with the primary use of a waiver of subrogation. Filing a claim against the insured relates to reporting incidents rather than the recovery of costs. An insurer's obligation to defend a lawsuit pertains to coverage and legal representation, not the recovery rights after a payout. Calculating the deductible amount involves determining the insured's out-of-pocket expenses before insurance coverage applies, which is unrelated to the concept of waiving subrogation rights.