A reservation of rights defense is a means by which a liability insurance carrier agrees to protect and defend its insured against a claim or suit while reserving the right to further evaluate and perhaps even deny coverage for some or all of the claim. It is most commonly used when the claim or suit contains both covered and non-covered allegations, when the allegations are in excess of policy limits, or when the insurer is still investigating its defense and coverage obligations. For the insurer, a reservation of rights provides the flexibility to satisfy its duty to defend without committing to coverage. For the business owner who ultimately may have to pay for an adverse judgment, it requires careful monitoring and attention.
Reservation Of Rights Letter Example For Insurance Company
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US-01995BG
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How to fill out Reservation Of Rights Letter?
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FAQ
Review the letter and respond promptly: Policyholders should take the time to thoroughly review both the letter and the applicable policy to see if what the insurance company says lines up with the terms of the policy. An insured should not ignore a reservation of rights letter if they receive one.
After receiving a reservation of rights letter, the first step should always be to call your attorney. If you want to assert your right to have independent attorneys handle your case, your attorney will let the insurer know, and (if there's an argument to be made), will dispute the insurer's reservation of rights.
Outline your name, address and policy information related to the claim. Describe the claim you are making and supply documentation. Ensure to include the date of the incident and the date of the letter. Indicate you would like return contact aa soon as possible to expidite your claim.
When the insurer sends you a reservation of rights letter, it is telling you that it has doubts whether your policy covers some or all of the claims. In a liability lawsuit, the plaintiff often makes several claims. The policy might cover some and exclude others.
Insurance companies typically utilize reservation of rights letters to alert policyholders of an investigation into a claim, stating that it reserves the right to deny coverage for some or all of the claim at a later date.