Defense Under Reservation of Rights

General liability insurance companies will sometimes deny claims if they believe it doesn’t fit your policy, it’s in excess of policy limits or other various reasons.  In some cases, your liability insurance company may deny coverage to you not at the start of the lawsuit, but later when you need it most.

Under Florida law, insurers can agree to defend you or your business under their “reservation of rights” agreement. This means that if you are sued for a torts-related claim, the insurance company will defend you as the policy requires. However, it also means your insurance company “reserves the right” to later deny coverage at any time.

It can be nerve-wrenching to receive a reservation of rights letter. If your insurance company denies your coverage, you could lose counsel and the torts case. Not only this, but you could face even more bills from your insurance company seeking “reimbursements” for the legal representation they provided. If you recently received a reservation of rights letter, it’s imperative you seek an experienced insurance claims attorney.

Insurance Attorney Explains Reservations of Rights in Tampa

Insurers use reservations of rights letters so they can control your counsel and reserve the right to deny you coverage later. This can be incredibly damaging to your case and could lead to an even more financial loss for you. To protect yourself or your business, it’s recommended you gain trusted legal counsel from an insurance attorney.

Contact Germain Law Group, P.A. to discuss your options today. Attorney Michael B. Germain is dedicated to protecting his clients from deceptive insurance companies. He will use his skills and resources to assist you and your case. Call us now at (813) 835-8888 to set up a free consultation today.

Germain Law Group, P.A. accepts clients throughout the greater Hillsborough County area including Pinellas County, Polk County, Hernando County, and Sarasota County.

Overview of Reservation of Rights in Florida

What’s entailed in a Reservation of Rights Letter?

When you receive a reservation of rights letter from your insurance company, this is a major warning bell. The letter indicates that the insurance company did not have all the facts it needs to outright deny coverage, so they are reluctantly agreeing to pursue their duty to defend.

However, by sending a reservation of rights letter your insurance company now has the right to deny coverage at any time. They may initially defend you, but the company can suspend coverage if they find the lawsuit doesn’t fit your liability policy. This can lead to an incredible amount of stress for you as the policyholder because the insurance company was paying your lawyer’s bills. Now, you may be without representation during your case or you could be saddled with expensive attorney fees.

The letter doesn’t only reserve the right to deny coverage. It also establishes that your liability company gets to choose which law firm will defend you and that firm must report back to the insurance company periodically. In some cases, the insurer’s defense choice isn’t qualified for your case or is more loyal to the insurer than you. What’s even more damaging is the fact that your insurance company could seek reimbursement payments from you after your case for legal representation you may not have even wanted.

The letter must be signed and returned to the insurance company within 30 days or they will ultimately deny your claim. Thankfully, you don’t have to sign the agreement, but you could be without any defense coverage for the claim filed against you.

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Why Reserve Rights When They Can Just Deny My Claim?

Insurance companies want to ensure they’re not sued for acting in bad faith, which is when an insurer refuses to uphold their express or implied duties. So, liability companies are cautious when they approach claims they don’t wish to defend. This is because a liability insurance company’s duty to defend has a much lower standard than their duty to indemnify, which is the act of paying damages on behalf of someone else.

In Florida, insurance companies must defend their policyholders if the mere allegations against them falls within their policy. This means the insurer will be especially careful to not outright deny claims at first if they don’t have all the facts they need. The insurer understands that if their denial of coverage is in bad faith, they may be financially liable for any losses you experienced. That is why they stay on the safe side and send the letter instead.

The reservation of rights letter can be used by your insurance company as a tool to buy time. As the trial proceeds, the insurance company will meticulously look for evidence that could give them a chance to suspend coverage. Not only this, but the insurance’s right to suspend coverage will only benefit them further if they seek reimbursements from you. This way the insurance company can make a profit and still not be liable for your damages or the damages they’ve caused denying your claim.

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What Can I Do If My Insurance Reserves Their Right to Deny Coverage?

When your insurance company is taking advantage of the system it’s important you fight back. It’s highly advised you hire experienced legal representation and file a claim for acting in bad faith against your insurance company. They can collect vital evidence to prove your insurance company was acting in bad faith when they denied your coverage.

A skilled insurance claims attorney can depose insurance experts and public adjusters to closely examine your policy. They can also analyze the defense that was assigned to you and show facts to the court that your insurance company intentionally hired unqualified counsel. These and other tactics can prove to a jury that your insurance’s right to deny coverage was calculated and in bad faith.

Winning the case will result in a monetary award that reflects all the losses you’ve experienced since your insurance denied their duty to defend. This can include judgement costs from the previous lawsuit, attorney’s fees, court costs, and emotional losses such as mental anguish.

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Additional Resources

Bad Faith Insurance – Visit the official website of the Florida Senate to access an interim report that discusses bad faith actions by insurance companies in Florida. Access the document to learn the obligations of the insurer, the difference between statutory and common law bad faith, and arguments for why Florida needs insurance law reform.

Florida Laws for Reservations of Rights – Visit the official website for Online Sunshine, a collection of Florida’s state laws and legislation. Access the site to learn what an insurance company must do if they want to deny coverage and the rights of the policyholder.

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Tampa Lawyer for Reservation of Rights Letters in Florida

Did you receive a reservation of rights letter from your general liability insurance company? Has your defense coverage been suspended because of this? If so, it’s not just important, but crucial that you have skilled legal counsel. Your insurance company denying coverage could leave you with a mountain of bills and no defense.

Contact Germain Law Group, P.A. to discover your options today. Michael B. Germain has the experience and resources you need to create an effective case. Call us now at (813) 835-8888 to set up a free consultation. Germain Law Group, P.A. represents the insured throughout the greater Tampa Bay area and surrounding areas including Brandon, Temple Terrace, St. Petersburg, Clearwater, and New Port Richey.

This article was last updated on June 21, 2019.