Reservation of Rights Letter
Definition:
The written document sent by an insurer to notify a policyholder of a reservation of rights.
Explanation:
This letter clarifies that the insurer is investigating but does not waive its right to deny the claim later. It often cites specific policy exclusions.
Example:
If a fire claim is under review, you may receive a reservation of rights letter explaining possible exclusions.
Why it matters:
This term affects how claims are handled and what payout a homeowner may receive.