Waiver Of Subrogation Calculator

Subrogation waivers redistribute risk. This calculator sizes.

Insured value

Annual claim probability %

Avg claim size

Subrogation recovery rate %

Annual subrogation value

$744

Expected claim

$2,125

Endorsement cost (est 2%)

$1,000

How the math works

Expected claim = probability × avg size. Subrogation value = expected × recovery rate.

On 2.5% claim rate × $85k avg × 35% recovery = ~$745 annual subrogation value. Endorsement cost $1-2k. Net-net, waiver of subrogation cheap insurance against landlord-tenant disputes — standard across commercial real estate for good reason.

How to Use

Enter insured value.
Enter annual claim probability %.
Enter avg claim size.
Enter subrogation recovery rate %.
Read annual subrogation value.

Frequently Asked Questions

What is subrogation?

After insurer pays claim, insurer steps into insured's shoes and pursues third parties for reimbursement. E.g., tenant's fire damages landlord's building; landlord insurer pays LL then subrogates against tenant. Mutual waiver blocks this.

Why waive?

Simplifies disputes. Avoids lawsuits between landlord/tenant over covered damages. Standard in most commercial leases. Both parties carry insurance; both waive right of their insurer to sue the other. Net effect: insurer eats loss instead of shifting.

Insurance impact?

Insurers add 'waiver of subrogation' endorsement. Adds 1-3% premium typically. Without endorsement, waiver in lease may be ineffective (insurer retains subrogation rights). Endorsement ensures mutual waiver actually binds insurers.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.