Insurance companies routinely send reservation of rights letters in response to a policyholder’s demand for coverage. Policyholders, for their part, routinely ignore those reservations. That’s a mistake. While it may be tempting to let reading and responding to a reservation of rights letter slide to the bottom of the endless to-do list, policyholders who do so may find themselves on the receiving end of an enforceable obligation to repay their own insurance company for amounts the insurance company paid in defense of a claim.
Read more: How to Defeat an Insurance Company’s Demand That the Policyholder Pay Back Defense Costs