NY General Adjuster test 1770

Terms in this set (111)

nforms the policyholder that the insurance company will defend him/her in a lawsuit but that certain aspects of the lawsuit may not be indemnified (covered).
A legal complaint brought against an insured may state several different causes of action, some which may be covered by the liability insurance policy and some which may not be covered. While the insurance company is obligated to provide a defense for claims brought against its insured, it may not be obligated to pay the monetary damages for certain types of claims. A "reservation of rights" letter from the insurer is a notice that even though the company is proceeding to handle the defense, certain causes of action might not be covered by the terms of the policy. By such a letter, the company reserves the right to deny coverage for these causes of action at a later date if coverage is determined not to be available. As an example, liability policies typically do not provide coverage for damages caused by intentional acts. If you injure someone under circumstances where the injury could have been accidental or could have been intentional, the legal complaint might allege both that your action was negligent and that your action was intentional. In court, the party suing you will have to prove it was one or the other. In such a case, you insurance company may write a "reservation of rights" letter saying it will provide you a defense but it will not pay damages (indemnify you) if the court finds you caused the injury intentionally rather than through simple negligence.