When you file an insurance claim, the insurance company can take quite some time to resolve your claim. They may deny you outright, but they are more likely to investigate the claim. To preserve their rights, they might give you a reservation of rights letter.
This letter means that they are investigating the claim, and they might end up saying some of the damages are not coverable. If they fail to give you a letter like this and accept your claim, they might be deemed to have waived some of their rights. That makes these letters a common, routine part of a case, but they do potentially signal some looming issues.
For a free case evaluation, call The Carrion Law Firm’s New York personal injury attorneys at (718) 841-0083.
What is a Reservation of Rights Letter?
When an insurance company starts handling your claim, they may accept it or deny it outright, or they might take time to investigate. However, they are required to keep you aware of what’s going on on their end, usually through letters. One common letter you might get is a reservation of rights letter.
If the insurance company were to say they will accept your claim, then they investigate and find out there is something that shouldn’t be covered under the terms of the policy, they would have locked themselves into coverage. Essentially, their acceptance would be a waiver of any right to deny the uncovered damages.
A reservation of rights letter just says they are reserving the right to potentially deny coverage for uncovered damages down the road instead of locking themselves in.
How is Reservation of Rights Different from a Denial?
When insurance companies deny your claim, they do so in very clear terms. A denial means they are paying you $0 and not covering anything.
With a reservation of rights letter, they are not actually denying anything – yet. However, they are saying that when they complete their investigation, they think there might be some damages the policy would not cover.
This is essentially just notice that there might be issues with coverage; they will clarify further once they complete the investigation. At that point, they might send you a letter accepting some damages but denying others under these reserved rights.
What Does That Mean for My Case?
Usually, a reservation of rights letter means the case will be delayed. If the insurance company sends you a reservation of rights letter, it means they are investigating further and will take more time before they give you a denial or acceptance.
It also means there might be trouble down the road. If they are already telling you that some of your damages might not be covered, it is possible that they could ultimately deny them later in your case.
However, they won’t know until they complete the investigation.
What Should I Do if I Get a Reservation of Rights Letter?
If you get a reservation of rights letter, don’t panic. These are fairly common, and any case with questionable coverage will usually end up involving reservation of rights.
However, you should call a New York personal injury attorney as soon as you can. This letter potentially sets up a fight later, and you may need to negotiate with the insurance company to get a denial overturned or to get damages you need covered under the policy.
If the insurance company is signaling early on that they might deny some coverage, you should get a lawyer. In fact, you should usually have a lawyer before you even reach out to the insurance company so your lawyer can handle contact with them instead of you doing it yourself.
Can I Fight a Reservation of Rights Letter?
You don’t need to fight a reservation of rights letter itself. This letter is merely notice that the insurance company might deny part of your damages later; they have not made a final decision yet, so there is nothing to fight.
However, your attorneys can be proactive. Being engaged in negotiations, communications, and demands early on in the case can give the insurance company clear parameters of what you are willing to accept. If they cannot bring themselves to accept your terms and pay full damages, they can prepare for a lawsuit from us.
How Long Will the Investigation Take After Reservation of Rights?
Insurance investigations can vary in how long they will take. Simple cases should not involve much investigation, but insurance companies can often legally extend investigations for quite a long time without any automatic penalties. We need to hold them to account.
Having a lawyer allows you to keep in contact with the insurance company, demand updates, and mitigate delays. It also allows us to file a lawsuit and take the case to court if they continue to delay the case.
In some cases, we can get signs that the insurance company does not intend to pay your claim. This is common if they repeatedly deny communications, say the policy was canceled, or otherwise try to dodge their responsibilities under your contract.
Can I Still Win My Case if I Get a Reservation of Rights Letter?
Insurance companies have an obligation to make a good-faith effort to pay claims that are covered under the insurance policy. When you are dealing with your own insurance company, you can sue them for breach of contract if they refuse coverage for covered damages. You can also sue them for bad faith insurance if they deny claims unfairly.
A reservation of rights letter tells you that they think some of the damages shouldn’t be covered under the policy’s terms. That often indicates that the contract issue will loom large: does the damage fit the terms of coverage or not? Our lawyers can hold them to their responsibility to cover your damages under the terms.
When the at-fault party’s insurance is the one denying you coverage, we don’t have to wait for the insurance company to decide what’s right. We can sue the party for damages and let them defend their case in court. If they decide to settle and pay what they owe you, that will end the case faster.
Call Our New York Personal Injury Attorneys Today
Call (718) 841-0083 for a free case evaluation with The Carrion Law Firm’s Harlem, NY personal injury attorneys.