Waiver clauses are essential to creating a comprehensive contract with clear guidelines on waiving rights. Without a legally binding clause, you could be exposed to potential liability and lawsuits. There are 5 main types of waiver and over 20 digital waiver solutions available, so choosing the most appropriate one for your business is important.
In this article, we provide an explanation of the waiver types and how they’re used.
What Is a Waiver?
This is a document or clause β either digital or printed β that waives a specific legal right or civil claim. Most contracts contain a clause relinquishing liability as it’s a key part of specifying the prerequisites for a provision to be enforceable and/or rights to be forfeited.
What Is the Purpose of a Waiver?
The purpose of this type of clause is to protect a party against liability. These clauses are used by one party (the Releasor) to voluntarily relinquish the right to make claims against the other party (the Releasee) or hold them liable for any injury and damages.
When Is a Waiver Necessary?
These are usually used in situations with inherent risk and potential liability to protect businesses or individuals from being sued.
5 Different Types of Waivers
Waive clauses can be used in many use cases, but there are five different types of transfer waivers that you’ll want to be familiar with.
Waiver of Liability
Liability waivers are used by business owners to protect their establishment from potential liability. Before a customer engages in a risky activity, they voluntarily relinquish their right to sue the company by reading and signing a description of the risks. The customer or Releasor, therefore, assumes the risks and agrees not to hold the organization responsible for any injuries or damages.
Waiver of Premium
Premium waiver clauses can be found in insurance policies and have the role of specifying the circumstances in which the insured may be relieved from paying their premiums. The most common reasons are death or disabilities.
Waiver of Subrogation
Waivers of subrogation are used to help insurers recover losses by levying a claim against third parties. For instance, if a tenant is injured due to unsafe conditions in a rented property, the insurance company will be unable to charge the landlord. This is why they charge higher premiums to offset the greater risk they’re assuming.
Loan Waiver
Loan waivers are used to relieve borrowers of any legal liability to repay a loan. This type of clause signifies either a full or partial assumption of the loan by the lender. For example, student loans may be waived if the student serves in the military or other federal programs.
Collision Damage Waiver
A collision damage waiver or CDW is a type of supplemental coverage that can provide superior insurance when renting a car. A CDW is optional and can have varying costs depending on what type of vehicle is being rented. Its coverage includes damage to the rental vehicle or instances of theft but not any bodily harm resulting from a car accident.
Final Thoughts
As you can see, the variety in waiver types ensures that you’ll always be able to find the right clause for your use case. Using the right clause on a legally binding contract can protect the rights of all parties while reducing potential liability in the process.
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