Insurance Law Lesson 35: Reservations of Rights

Not all claims are created equal. Some can be assessed and quickly acted on. Others can be immediately denied. Many require some sort of investigation by the insurer.

While an insurer investigates claim, it may send a letter describing the claim, stating that the claim is under investigation, and setting forth policy terms that may affect or preclude coverage for the claim. This letter is a called a reservation of rights letter, or an ROR.

Many jurisdictions require some form of an ROR or the insurer will be barred from later asserting coverage defenses. Some have specific time limits for sending an ROR. The level of detail required also varies.

Most RORs state that the insurer reserves the right to rely on all policy language, including terms not referenced in the ROR. Whether that actually works depends on the jurisdiction and the facts of the case.

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