The Letter That Says 'We Are Not Sure Yet'

It arrives on letterhead, it is long, and it lists policy provisions with an ominous tone. A reservation of rights letter is genuinely important — and it is not the same as a denial, which is what most people assume when they read one.

What it actually says

It says: we are investigating and, where a defense is involved, providing one, but we have identified a question about whether this loss is covered, and we are not giving that question up by helping you now. Without such a letter, an insurer that proceeds without objection may lose the ability to raise a coverage issue later. The letter preserves the question. It is legal housekeeping as much as it is a warning.

Why one gets sent

• The facts reported might fall within an exclusion.
• There is a question about whether the driver was a covered person or the vehicle a covered vehicle.
• Notice of the claim was late.
• Some claimed damages may be covered and others not.
• There is an allegation of intentional conduct, which policies generally do not cover.

What to do when you get one

1. Read it for the specific issue. Somewhere in it is a sentence naming the actual question. Find that sentence.
2. Ask, in writing, what would resolve it. "What information do you need to close the coverage question raised in your letter of this date?" Often it is a document or a clarification you can supply.
3. Pull out your own policy and read the provisions it cites. Do not take the paraphrase on trust.
4. Keep cooperating. Policies require it, and refusing to cooperate creates a second, worse problem.
5. Keep the letter. With the date. It matters if this becomes a dispute.

When to get advice

If the letter concerns a liability claim being made against you and the amount at stake is significant, that combination — a defense provided under reservation, and real exposure — is one where people commonly consult an attorney. We are agents, not lawyers, and we would say the same thing to a family member.

The reassuring part

Plenty of these letters are precautionary and the claim proceeds normally. It is not a prediction. It is a placeholder for a question that has not been answered yet.

Not sure what your policy says about the provision they cited? Send it to us and we will read it with you.