Accident Claim Lawyers
InsuranceUpdated September 2026

Reservation of rights letters

In plain English: a reservation of rights is a letter from an insurer saying it will investigate or defend a claim for now, but it may later decide the policy doesn't cover it and refuse to pay.

Why insurers send them

Insurers often have to act before they know all the facts. If an insurer starts defending its policyholder and later wants to deny cover, the policyholder could argue the insurer gave up that right by acting as if the claim were covered. The reservation of rights letter prevents that. It's mostly a US practice; in the UK and Canada, insurers use similar non-waiver agreements or letters reserving their position.

The letter should name the specific policy provisions the insurer is relying on, such as a late-notice condition, a business-use exclusion or a question about whether the driver had permission.

If you're the policyholder

  • Read it closely. Identify exactly which clauses the insurer says may apply and why.
  • Answer requests promptly. Delay can strengthen the insurer's position.
  • Consider independent advice. A reservation creates a potential conflict between you and the insurer. In a number of US states, that conflict may entitle you to choose your own defence lawyer at the insurer's expense.
  • Challenge weak grounds. Write back with facts that contradict the insurer's concern. A vague or generic reservation may be challenged.
  • Keep your own records. Save every letter and note every call.

If you're the injured person

You won't normally receive the letter, but it affects you. If the at-fault driver's insurer reserves its rights, it may be slower to settle, and there's a risk the insurer eventually refuses to pay. Your lawyer will want to know early, because it can change the strategy. It may mean looking harder at other policies, such as your own uninsured or underinsured motorist cover, or another party's liability insurance.

Example

A delivery driver causes a crash in his own car. His insurer agrees to defend him but reserves its rights under a business-use exclusion. The injured driver's lawyer asks for details of the delivery company's insurance, because that may become the main source of payment.

How it ends

  1. The insurer accepts cover and withdraws the reservation.
  2. The insurer denies cover in writing, which can be challenged.
  3. Either side asks a court for a declaratory judgment on whether the policy applies.
  4. The claim settles and the question never gets decided.
Silence isn't agreement

Not replying to a reservation of rights letter doesn't mean you've accepted its position, but a prompt written response keeps your options open and creates a record.

Next: policy exclusions · insurer bad faith · conflict of interest.

Related terms

Collision CoverageCollision coverage is the part of a car insurance policy that pays to repair or replace your own vehicle after it hits another vehicle or an object, or rolls over, whoever caused the crash.Comprehensive CoverageIn the US and Canada, comprehensive coverage pays for damage to your own car caused by something other than a collision with another vehicle or object, such as theft, fire, a falling tree, hail, flood or hitting an animal.Coverage LimitA coverage limit is the maximum amount an insurance policy will pay for a particular type of loss.Declarations PageThe declarations page, often called the "dec page", is the summary sheet at the front of an insurance policy.

General information, not legal or medical advice. Rules differ between US states, the UK and Canadian provinces, so check the law where your accident happened. How we write and check · Legal disclaimer