WE ARE FREQUENTLY ASKED BY CLIENTS whether or not they should eliminate the waiver of subrogation clause from their contracts. A decision in New York state clearly points out why every effort should be made to retain the provision in the contract.
In that case, the plaintiffs, who owned a jewelry store, contracted with an alarm company to install and monitor an alarm system along with a closed-circuit television. The contract provided the normal provisions, which stated that the alarm company was not an insurer and that it was the responsibility of the owner to obtain adequate insurance covering the premises and its contents. The contract further provided a limitation of liability provision and that the subscriber would look exclusively to their insurer for financial protection from risks and liabilities. It included the statement, “You waive all rights and remedies against us, including all rights of subrogation, that you, any insurer, or any other third party may have due to any losses you or others may incur.”