Reservation of Rights Defense

The term “Reservation of Rights” is often heard in the context of auto insurance claims and coverage. This term can be confusing, and can often lead to frustrations for those trying to make a property and/or injury claim against an insurance carrier for damages sustained in a motor vehicle collision.

Simply put, the term “Reservation of Rights” means that the insurance company is notifying the claimant and their insured that there may not be coverage for the claim, though there in an active insurance policy. Reservation of Rights letters should be sent by the insurance company as soon as there are questions as to applicable coverage. At a minimum, the letter should include the following information:

1. The relevant policy language that Is applicable to the claim in question
2. How the relevant policy language is applicable to the claim being made
3. The insurer’s position regarding coverage for claim in question

When the insurance company invokes this right, it is not outright denying the claim-rather it is invoking its right to conduct an investigation into the claim to figure out what happened so it can be determined if the insurance policy in question is applicable. There are a number of reasons an insurance company can invoke the defense of Reservation of Rights. Some of the most common include the following:

1. 1. Some of the allegations in the claim do not fall within the scope of the coverage the policy affords
   2. There is documented policy exclusion in the policy language that applies to the claim being made
   3. Some of the damages caused are not covered by the insurance policy in question
   4. There has been a breach by the insured party which creates an instance of non-coverage including the insured not communicating with their insurance company to verify the details of the claim and their involvement.

Part of this investigation often includes that the insurance company be able to talk to the driver they insure. Many times when the insurance company utilizes the defense of “Reservation of Rights”, it is because they are unable to get a hold of the driver it insures. When this occurs, the insurance company is within its right to not afford coverage until they are able to speak with the insured which can often be a point of frustration for an injured party attempting to make a claim. Rest assured, there are still options to force coverage, many of which can be explored with an experienced personal injury attorney.

If you or a loved one is filing a new claim with an insurance company and have been told there is no coverage on the basis of a Reservation of Rights Defense, contact Herrman & Herrman, P.L.L.C., for a free consultation.

*This blog is for informational purposes only and is not intended to, and should not be construed as legal advice.