Reservation of Rights Letter
A formal letter from the insurance carrier notifying the policyholder that the carrier is investigating the claim but reserving the right to deny coverage based on specific policy provisions. Not a denial, but a warning.
What Is a Reservation of Rights Letter
A reservation of rights (ROR) letter is a formal written notice from the insurance carrier to the policyholder stating that the carrier is continuing to investigate and process the claim while explicitly reserving the right to deny coverage based on specific policy provisions identified in the letter. It is not a denial. It is the carrier saying "we may deny this, and here is why, but we are still looking into it."
Why Carriers Send ROR Letters
Carriers send ROR letters when the investigation reveals potential coverage issues but the carrier needs more information before making a final decision. Common triggers include questions about the cause of loss, late reporting of the claim, potential policy exclusions (like cosmetic damage exclusions or maintenance exclusions), and possible misrepresentation on the application. The letter protects the carrier from a bad faith claim. If they denied the claim outright without investigating, the policyholder could argue bad faith. The ROR letter shows the carrier is investigating in good faith while being transparent about potential issues.
What to Do When You See an ROR Letter
If a homeowner receives a reservation of rights letter, read it carefully to identify the specific provisions cited. Respond to every request for information promptly and completely. Delays in responding give the carrier additional grounds for denial. Document the loss thoroughly with photographs, contractor estimates, and any supporting evidence that addresses the carrier's stated concerns. For large claims or complex coverage questions, consulting with a public adjuster or insurance attorney at this stage is advisable.
Frequently asked questions
A reservation of rights letter means the carrier is putting the policyholder on notice that specific policy provisions may result in a coverage denial. The carrier is not denying the claim yet. They are investigating while preserving their right to deny later. It is a warning, not a decision.
Yes, it should be taken seriously. The letter identifies the specific policy provisions the carrier may use to deny coverage. The homeowner should read the letter carefully, identify the cited provisions, and consider consulting with a public adjuster or insurance attorney. Responding promptly and providing requested documentation can help resolve the issue.
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