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Table of Contents
- Introduction
- What is a reservation of rights letter?
- Conflict of interest.
- Time for Sending Reservation of Rights Letter.
- Consequence of Failing to Send Reservation of Rights Letter.
- Insured's Options on Receipt of Reservation of Rights Letter.
- Independent Counsel and Choice of Counsel.
- Conclusion
APPENDIX "1" - Sample Reservations of Rights Letter
APPENDIX "2" - Sample Replies to Reservation of Rights Letter
Abstract
When a lawsuit is filed alleging tort damages, the lawyer representing the Defendant first thinks of insurance and instructs his clients to turn over the lawsuit to any available insurance carrier in hopes of finding both coverage and a defense of the suit. The client sends the lawsuit to his insurance agent, who sends it to a possible liability carrier, who sends it to the appropriate claims manager. The first thing the manager should do is to determine whether there is some coverage that might possibly be called into play and if there is, does the policy include a duty to defend. If so, then the carrier will probably accept the file and hire a lawyer to defend the claim. If there are facts to suggest that there is something in the suit that would not be covered by the applicable policy, the carrier then issues a reservation of rights letter. Why do they do that, and how should the insured respond?
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