Many companies have liability insurance to protect them in the event they ever get sued. However, even if your policy requires that your insurer handle your claim, your insurer may send you a reservations of rights (ROR) letter to warn you that some of your claimed losses may not be covered.
In order for a ROR letter to be legally valid, it must meet all the necessary criteria. ROR letter requirements vary from state to state, but generally, letters must be sent in a timely fashion and provide information as to which claims may be denied and reasons for the possible denial. Failing to send a ROR letter or failing to include enough information in the letter can serve as a waiver of the insurer’s right to deny coverage.
Insurers have a duty to defend
Your liability insurance policy requires your insurer to investigate the claim and defend you in a lawsuit in the event you get sued. However, if your insurer sent you a ROR letter that met all necessary requirements, the insurance company can later use the results of the investigation as grounds to deny coverage. If this happens in Nevada, you may be required to pay damages if you are found liable, as well as the insurer’s defense costs.
What should I do if I receive an ROR letter?
If you have received an ROR letter, there is a chance that some or all your claims may be denied by your insurer. Your insurer can give you an idea of which claims, if any, the insurer is likely to deny. If the insurer fails to give you enough information or informs you you’re your claim will be partially or fully denied, it may be in your best interest to contact an attorney that specializes in insurance law, but is not working for your insurer. Your attorney will make sure to protect your best interests and can help review your ROR letter and policy and send a response.