The British Columbia Reservation Of Rights Letter

A reservation of rights letter^[1] is an insurer’s notification to an insured that there may be none or only limited coverage for a claim under the insurance policy. Such a notification allows an insurer to investigate or even defend a claim to determine whether coverage applies (in whole or in part) without waiving its right to later deny coverage based on information that is revealed during the course of the investigation.

Insurers use a reservation of rights letter because, in many claim situations, all the insurer has at the beginning of the claim process are various unsubstantiated allegations. In reserving its rights to later deny coverage, the insurer advises the insured regarding its concerns that the claim may not be covered under the policy pending further investigation.  Although a reservation of rights letter protects an insurer’s interests, it also alerts an insured to the fact that some elements of the claim may not be covered. When you receive such a letter it should alert you to the fact there may be a coverage issue and you should consult with an experienced Vancouver insurance policy lawyer to determine what steps may be necessary to protect your interests and avoid an uninsured claim.

Concerns About Coverage

As Cacchione J., of the Nova Scotia Supreme Court, wrote in the case of Snair v. Halifax Insurance Nationale-Nederlanden North America Corporation^[2] (1995), 145 N.S.R. (2d) 132 (N.S.S.C.):

“The reservation of rights letter and the non‑waiver agreement are both vehicles by which the insurer advises its insured that it has concerns about coverage. These documents are issued so that an insured does not infer from the defence of an action, the hiring of experts, and the continuing investigation of the claim that coverage is in place.”

Generally, if an insurer does not advise the insured which areas of the claim are not covered by the policy at the time when the insured first reported the claim, and the insured was prejudiced as a result of the insurer’s silence, the doctrines of waiver and estoppel will apply against the insurer. In other words, the insurer will be deemed to have waived the breach of the policy and will, thus, be estopped from pleading said breach.  As a result, oftentimes the best strategy for insurers to avoid this result is with the use of a reservation of rights letter.

Contact a Vancouver Insurance Policy Lawyer

If you have received a reservation of rights or denial letter from an insurance company, it is important to speak to a Vancouver insurance policy lawyer as soon as possible to determine the nature of the coverage issue and what steps may need to be taken. We can explain your rights under your insurance policy.  Contact either Ross McLarty or Murray Wolf for a no obligation 30 minute free consultation. Call the law offices of McLarty Wolf at (604) 688-9542 today or contact us via our online form here.

References:

[1] https://www.irmi.com/online/insurance-glossary/terms/r/reservation-of-rights.aspx
[2] http://canliiconnects.org/en/summaries/19717
[3] http://www.bclaws.ca/civix/document/id/complete/statreg/12037_00