Once a claim has been submitted to an insurance company, the insurance company has the responsibility to either pay or deny the claim and to do one of the above in a prompt manner. But, not all of the details of the claim may originally be evident; therefore the insurance company may not be in a position to determine whether or not coverage applies under the policy. Thus the reason the insurance company sends a Reservations of Rights letter. The letter allows the insurance company to maintain their investigation, without prejudice, by allowing them to postpone their decision of whether or not to provide coverage, therefore retaining their rights.
A Reservation of Rights letter does not, however, give an insurer an unrestricted time period. They are still on the clock and will at some point have to acknowledge whether or not coverage exists. To defer their decision too long could give a court the means to determine the insurer is estopped, meaning they cannot raise defenses in the future because of their inaction. If a practical amount of time has elapsed since you received a Reservations of Rights letter and the insurer still has not made their position clear, we recommend you inform the insurer in writing that you are entitled to a definitive answer as to whether or not coverage exists.
Learn more about how this affects your Norfolk Car Insurance claims with Salzberg Insurance Agency today!