Reservation of Rights Letter

I’m Katelyn Holub, an attorney focusing on personal injury law in northwest Indiana.

Welcome to Personal Injury Primer, where we break down the law into simple terms, provide legal tips, and discuss personal injury law topics.

Today’s question comes from a caller concerned about a car crash he was in. He said the crash wasn’t his fault. He said all he did was send a letter to the other driver’s insurance company putting them on notice that he intended to hire an attorney. The other driver’s insurance company sent him a copy of a letter sent to its insured driver notifying the driver of a coverage dispute. He wanted to know his legal options.

We asked the caller to bring in a copy of the letter so that we could analyze what was going on.

The letter, addressed to the at-fault driver who hit the caller, had the words – reservation of rights – in capital letters at the top.

If you’ve never heard the term reservation of rights here’s what it means.

The insurance company for the at-fault driver told the at-fault driver, that it believes it has a valid reason to deny coverage, but while it further investigates the matter, it will undertake to defend the at-fault driver if a suit is filed.

Oftentimes insurance companies send out these reservation of rights letters.

Once an insurance carrier serves a reservation of rights letter and then hires an attorney to defend their insured on a claim, there is a potential for a determination that the coverage is invalid or void and the party who receives such a letter should protect themselves by hiring counsel to make sure they are being properly defended.

As for the caller, it will be important for any attorney representing the caller to investigate the basis for the reservation of rights letter.

Perhaps there are legitimate grounds to deny coverage.

Perhaps the driver of the vehicle was not a named insured on the policy.

Perhaps the policy excludes coverage if a vehicle is used in the commission of a crime and the car at the time of the crash was fleeing the police.

If there is no insurance coverage, the next analysis would be to determine if the at-fault driver has assets and is collectible.

I hope you found this information helpful. If you are a victim of someone’s carelessness, substandard medical care, product defect, work injury, or another personal injury, please call (219) 736-9700 with your questions. You can also learn more about us by visiting our website at DavidHolubLaw.com – while there, make sure you request a copy of our book “Fighting for Truth.”