First-party property insurers for minimal or no additional premium will allow their insureds to waive the insurer’s right to subrogation against persons responsible for damage to the property if done before a loss or by a contract.

In so doing, the insurer gives up a right to recover money paid to its insured in accordance with the terms and conditions of its insurance policy.

In Rural Mut. Ins. Co. v. Lester Bldgs. LLC, 2019 WI 70 (June 18, 2019), Rural Mutual Insurance Company sought protection by the Wisconsin Supreme Court from its agreement to waive subrogation and allow it to recover from the entity responsible for the damage.

The circuit court determined that Rural Mutual’s claims against Lester Buildings, LLC, Phoenix Insurance Company, Van Wyks, Inc., and West Bend Mutual Insurance Company were barred pursuant to a subrogation waiver contained in a Lester Buildings’ contract with Rural Mutual’s insured, Jim Herman, Inc. ("Herman").