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Reservation of Rights

A reservation of rights is a notification to the insured by the insurer regarding potential coverage issues and prevents waiver of the insurer’s rights to deny coverage under the policy at a later date.

Although a reservation of rights (ROR) letter protects the carrier’s interests, it also informs the insured that some parts of his loss may not be covered. The letter also states the insurer will continue to investigate the claim, but in doing so, it does not forego the ability to later deny the claim if coverage is found not to exist. After writing the ROR, the adjuster still must continue the investigation into the loss. 

There are several parts to a well-written ROR letter, and like other facets of the claim, the state where the loss occurred will govern the rules regarding the ROR letter. In nearly all cases, the ROR letter must be “timely.” Timeliness may or may not be defined by the state. The chart below is solely for use as an example. Adjusters must be familiar with the requirements of the states for which they handle claims.

A ROR letter should:

  1. Be timely

  2. State that it is a reservation of rights

  3. Identify the applicable policy

  4. Identify the correct insurer

  5. Specifically discuss the claim and how it relates to the policy in question

  6. Chunk the coverage issues into bite-size, easy-to-understand language, accompanied by the relevant policy language

  7. Include a general reservation of rights for other defenses as the investigation continues

  8. Advise the insured of its right to independent counsel, if necessary

  9. Be sent to all insureds

  10. Include a right to recoup defense costs, if allowed in the jurisdiction

  11. Provide all notices required in the jurisdiction, if any

  12. Be updated to provide that the reservations continue or change to a denial of coverage, or issue a withdrawal of the reservation of rights.

Adjusters should get comfortable calling the insured and discussing the coverage question with the insured prior to the insured receiving the ROR letter.


Finally, the adjuster is well advised to also call the insured’s retail agent to inform him/her of the forthcoming ROR letter.

Below is an example of a very generalized reservation of rights letter. It is not meant to be used verbatim. These materials are provided for informational and educational purposes only and do not constitute legal advice or legal opinions because I am not an attorney.

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