Reservation of Rights Letters: What They Mean, How to Respond

Reservation of rights letters can be confusing, misunderstood, and full of insurance jargon. Policyholders receiving an ROR letter may see it as a threat from an insurer to unjustly deny coverage. The insurer, however, may view it as a way of protecting its right to exclude coverage for at least part of the claim when coverage is questionable. From either perspective, the situation raises some interesting questions: How should a policyholder respond to a reservation of rights letter? Is the ROR letter clear and specific enough to avoid breach of contract? Can the policyholder trust the insurer to properly and fully defend given the reservation of rights?