Posted on June 26, 2009 in Personal Injury
When you have a claim or suit made against you, and your insurance company does not believe that you have coverage under the policy it may send you a reservation of rights letter. Sometimes they might ask you to sign something called a non-waiver agreement, but it boils down to the same thing, the company wants to retains its arguments and its right to sue you. Not a very nice way to treat you, the customer, and you can just forget those fancy slogans and promises they told you when you got your policy. Remember how your insurance company would be on your side, you would be in good hands and treated like a neighbor. Well now you are on the wrong side, the hand your getting is a fist to the jaw, and they want to run you out of the neighborhood. So get smart, and quick.
Under a reservation of rights the insurance company offers to defend you, but the insurance company is not conceding that the insurance policy covers the claim against you. If it is not covered, you will have to pay back the insurance company for any of the benefits it extended such as attorneys fees which you are recieved under the policy. However, if it is covered, you will have not have to pay back your insurance company for its legal costs and other expenses it incurs.
Unfortunately, when an insurance company issues a reservation of rights, it is looking out for its own interests, and may not really be looking out for yours. This puts you in a legal limbo of sorts as your insurance company is talking out of both sides of its mouth. Your insurance company is both offering to hire an attorney of its choosing to defend you, while at the same time maintaining the legal right to sue its own insured. In fact you may be sued by the the insurer while at the same time the insurance company hires another lawyer to defend you. So you are a defendant in the original claim, and now you are being sued by your insurance company.
In some cases under this type of process the attorney representing you that is paid for by the company may have a conflict of interest. If so, your company may be required to appoint another lawyer. In my opinion it is always in your best interest to hire your own lawyer who can help you with the insurance company and keep an eye on the lawyer that the company hired and is supposed to be on your side.
In some states you may reject the reservations and are not required to accept the defense unless it is without any conditional coverage issues, and in other states you are not allowed this right. In states in which you are not required to accept the reservations, you should consult with a private attorney who may help you enter a settlement agreement with the person bringing the claim to protect your financial interests and assign any claims you may have against your insurer to the person making the claims against you.
The best thing to know is that when the company sends you a reservation of rights you need help, and you need it fast. This is not a do it yourself project, you should seek the advice of an attorney other than the lawyer who is being paid for by your insurance company.