Once a personal injury victim files a claim with or against an insurance company, the first document they will send to the insurance adjuster is called a demand letter. The first document they might receive from the insurance provider is called a “reservations of rights” letter. This letter is sent by the insurance company before the negotiations process begins. Continue reading to learn what this letter is and how it is used in personal injury litigation.
Reservations of RightsWhen victims receive a reservations of rights letter from the insurance company they are filing a claim with, they can feel a sense of anxiety due to misconception of its contents. Many believe that the insurance carrier is claiming they are not going to cover a victim’s damages, when in fact, this is not the case. A reservations of rights letter simply conveys to the claimant that the insurance provider “reserves the right” to not pay for anything if the accident is not covered under their policy. It also informs the claimant that they are still going to investigate the case to determine liability.
Insurance companies send these letters to claimants in order to protect themselves from future legal conflicts. This informs claimants that although they are starting an investigation, they are not acknowledging fault or promising coverage. They also express that remuneration is not guaranteed at all unless their investigation proves the accident is covered under their particular policy. Most often, this letter is meant to slightly intimidate claimants, in hopes that they decide to take a quicker and lower settlement and avoid going to trial.
Personal injury victims or claimants needn’t be nervous about a reservations of rights letter. They still have an obligation to investigate a claim and provide terms of settlement if the accident and injuries are covered under policy. Keep in mind that insurance companies fervently attempt to pay out the lowest possible compensation to victims, which is why it is important to hire a licensed personal injury attorney for aggressive and effective representation. They can recover the full and fair compensation a victim or their families deserve.