Reservation of Rights
A notice from an insurer that it is investigating a claim while reserving the right to deny coverage if the claim proves not to be covered.
A reservation of rights (ROR) letter is a formal notice sent by an insurance company to a policyholder informing them that the insurer is providing a defense or investigating a claim under the policy, but that it reserves the right to deny coverage if the investigation reveals the claim falls outside the policy's terms. The insurer does this to avoid waiving its coverage defenses by taking action on the claim.
Receiving an ROR letter does not mean your claim will be denied—it means the insurer has identified coverage questions that require investigation before a coverage determination can be made. Common triggers include late reporting, potential policy exclusions, coverage disputes about the cause of loss, or allegations that might implicate intentional acts exclusions.
When you receive an ROR letter, consult a coverage attorney or public adjuster to understand the specific coverage issues raised. You may have the right to retain independent counsel at the insurer's expense in some jurisdictions if there is a conflict of interest between the insurer's position and your defense.
Real-World Example
The insurer defended the homeowner against a neighbor's lawsuit under a reservation of rights, noting that if the damage was intentional the policy's exclusion might apply.