What Does Right of Recourse Provision Mean?

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What does Right of Recourse Provision mean? Read on to discover the definition & meaning of the term Right of Recourse Provision - to help you better understand the language used in insurance policies.

Right of Recourse Provision

Right of Recourse Provision

A provision in fiduciary liability policies giving an insurer the right to subrogate against an insured. (Subrogation is the process by which an insurer collects monies from a party responsible for causing a loss, for which an insurer has already made an indemnity payment.) For example, assume that a fiduciary's negligence in administering an employee benefit plan caused a loss that was covered by a fiduciary liability policy. After the insurer pays that loss, a right of recourse provision would give the insurer the right to seek reimbursement from the fiduciary whose negligence caused that loss. Right of recourse provisions represent an exception to the general practice in the insurance industry whereby insurers do not subrogate against insureds. Within the past decade, however, right of recourse provisions have become relatively uncommon. In fact, few fiduciary liability insurers currently include right of recourse provisions in their forms. Instead, most fiduciary liability forms are silent as to the issue of subrogating against an insured.

We hope the you have a better understanding of the meaning of Right of Recourse Provision.

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