There are times when your insurer needs to defer its decision with regard to whether coverage exists or whether coverage exists for all the claims being made against you. This may be because of late notice, the potential that the claims arose out of some intentional acts or some other actual prejudice that your insurance company believes it has sustained. The insurance company will then send you a reservation of rights letter notifying you that it is investigating your claim or may actually be handling your claim but that all or parts of the claims against you may not be covered by the terms of your insurance policy.
This type of letter is not just pro forma and should be reviewed immediately. It will trigger certain rights you did not originally have, i.e., the right to retain your own counsel and perhaps have that attorneys’ fees be paid by your insurance company, but can also result in your insurance company eventually disclaiming or denying coverage.
The bottom line- if you receive such a letter, you should immediately consult with an experienced attorney who can explain to you what rights and obligations you now have.