A Reservation of Rights Letter is notification from your insurance company that coverage for a claim may not apply. The notification allows the insurance company to continue to investigate a claim in order to determine whether coverage applies without waiving its right to later deny coverage based on the information revealed by the investigation.
Insurance companies use a reservation of rights letter because in many claim situations, all the insurance company has at the inception of a claim are various unsubstantiated allegations and, at best, a few confirmed facts. In reserving its rights to later deny coverage, the insurance company is merely telling the insured of its concerns that the claim, in whole or in part, may not be covered under the policy, pending further investigation.
Although a reservation of rights protects the insurance company's interests, it also alerts you to the fact that some elements of your claim may not be covered, thereby allowing you to take the necessary steps to protect your potentially uninsured interests.
If you have received a reservation of rights letter and have questions, please give us a call. We will be happy to discuss it with you.