Malpractice Insurance Reservation of Rights (ROR) Letter

Malpractice Insurance Reservation of Rights (ROR) Letter

You just reported a malpractice insurance claim. The insurer response was sending you a (ROR) Reservation of Rights letter.  No need to panic, the insurer did not just decline your claim.

A Reservation of Rights letter is a document sent by an insurance company to a malpractice insurance policyholder to inform them that the insurer is investigating a claim but reserves the right to deny coverage later if the claim falls outside the terms of the policy. This letter is not a denial of coverage but a notice that the insurer is preserving its rights under the policy while it investigates further.

 

Key Elements of a Reservation of Rights Letter in Malpractice Insurance:

1. Identification of the Claim:

   – The letter will reference the specific claim or lawsuit, including the claimant’s name, the date of the alleged incident, and the policy number.

2. Explanation of the Issue:

   – The insurer will outline the specific policy provisions or exclusions that may apply to the claim. For example, the claim might involve allegations that fall outside the scope of coverage, such as intentional acts, criminal behavior, or services not covered under the policy.

3. Reservation of Rights:

   – The insurer will explicitly state that it is reserving its rights to deny coverage or defend the claim if it is ultimately determined that the claim is not covered under the policy.

4. Continued Defense:

   – The insurer may agree to provide a defense (e.g., hiring an attorney) for the insured while investigating the claim, but this is done under the reservation of rights.

5. Request for Cooperation:

   – The insurer may ask the policyholder to cooperate fully with the investigation, including providing documents, records, or other information relevant to the claim.

6. No Waiver of Rights:

   – The letter will typically state that by providing a defense or investigating the claim, the insurer is not waiving any of its rights under the policy.

 

 Why Insurers Issue Reservation of Rights Letters:

– Complex Claims: Malpractice claims can involve complex legal and factual issues that require further investigation.

– Potential Coverage Disputes: The insurer may identify potential exclusions or policy limitations that could affect coverage.

– Protection for the Insurer: The ROR letter protects the insurer from claims of bad faith or waiver of rights if it later denies coverage.

 

 What the Policyholder Should Do:

1. Review the Letter Carefully:

   – Understand the specific reasons the insurer is reserving its rights and which policy provisions are at issue.

2. Cooperate with the Insurer:

   – Provide all requested information and cooperate with the investigation to avoid jeopardizing coverage.

3. Monitor the Claim:

   – Stay informed about the progress of the claim and any decisions made by the insurer.

 

 Example of a Reservation of Rights Letter:

—

[Insurance Company Letterhead]

[Date]

[Policyholder’s Name and Address]

Re: Reservation of Rights – Claim Number [XXX], [Claimant’s Name]

Dear [Policyholder],

We are writing to inform you that we have received a claim against you alleging [brief description of the claim]. While we are currently investigating this matter, we want to advise you that there may be issues regarding coverage under your malpractice insurance policy.

Specifically, the claim may involve allegations that fall outside the scope of coverage provided by your policy, including but not limited to [list potential exclusions or issues, e.g., intentional acts, services not covered, etc.]. As such, we reserve our right to deny coverage for this claim if it is determined that the allegations are not covered under your policy.

Please note that we are providing a defense for this claim under a reservation of rights. This means that we may withdraw our defense and deny coverage if it is determined that the claim is not covered. By providing this defense, we are not waiving any of our rights under the policy.

We request your full cooperation in our investigation of this matter. Please provide any additional information or documentation that may assist us in evaluating this claim.

Sincerely,

[Insurance Company Representative]

[Contact Information]

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This letter ensures transparency between the insurer and the policyholder while protecting the insurer’s ability to deny coverage if necessary. If you receive such a letter, it’s important to take it seriously and seek legal advice if needed.

If the claims department and the firm do not agree on the coverage interpretation, consider hiring an attorney that specializes in malpractice insurance cases. Make sure to follow all of the policy steps to appeal any coverage decision disagreement. Courts and/or insurance departments likely will not intercede until the firm has followed all policy terms and conditions.

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