Insurers do not have a right to sue in their own name. Instead, subrogation rights allow insurers to step into the shoes of their insured (usually the landlord under a lease) to pursue a claim in the insured's name. This can include a claim against the insured’s tenants.

Tenants often want subrogation rights against them waived since it is the tenants who are ultimately paying for the insurance. Whilst this may be fair, a landlord cannot guarantee that its insurers will agree to do so. Even if the landlord’s current policy contains an express waiver, agreeing an absolute obligation to procure this for the duration of the lease might restrict the landlord’s choice of insurers. This could be particularly problematic where the landlord insures under a block policy.

Such difference of position can often be a sticking point in lease negotiations. It is though a point which need not arise in the majority of leases. It is a common position that, unless they have been negligent, tenants are not liable for disrepair caused by insured risks. As an insurer can have no greater rights against a third party than its insured, if the landlord has no claim against its tenant, its insurers cannot pursue a claim against it either.

If you are in disagreement with your tenant over waiver of subrogation, check whether the lease already gives the tenant sufficient protection. If not, seek advice on what provisions would be acceptable to include to provide the tenant with sufficient comfort without having to obtain an express waiver.