A reservation of rights letter from an Insurance Company can bring about many different reactions from an insured, but most often confusion and anger.
So what does this letter mean?
Once a claim is submitted, the Company has an obligation by law to either pay or deny a claim, and they must do this fairly promptly. The letter means that the Company has coverage concerns regarding details of the claim and whether or not coverage exists. In some cases, not all details of the claim are known at the time of loss, and therefore a Company doesn’t know if they can pay, or deny the claim. This is when a reservation of rights letter get’s sent to the insured. This letter allows the Insurance Company to comply with their legal obligations to the policyholder and continue to investigate the claim. This doesn’t mean that the claim is not covered, but rather the entire facts of the claim are not known at this time, and therefore it is difficult to determine whether or not coverage applies. In some cases some coverage may apply and some coverage may be excluded.
A reservation of rights letter doesn’t give an Insurance Company all the time in the world. At some point the Company must acknowledge whether or not coverage exists. If a Company defers their decision too long courts could determine that the Company is estopped, meaning that the Insurance Company cannot raise a defense denying the claim because of their previous inaction.
If you have received this letter and have concerns, we are here to help. There are several options available that we can discuss.
Thams Agency is one of the fastest growing agencies in Iowa and is able to provide its clients with the latest and greatest of what the insurance industry has to offer and much, much more.
We are headquartered in Denison, IA with physical locations in Avoca, IA and Des Moines, IA but the reality is we can be anywhere virtually. We provide a personal touch and a local feel to the solutions and services we provide our clients. We provide insurance products in several states in the midwest. We pride ourselves on exceeding our client’s expectations in every interaction to make sure that our client’s know how much we value and appreciate their business. Contact us today 800-798-4325 or drop us an email at firstname.lastname@example.org .