Executive Summary: A Reservation of Rights letter allows Florida insurers to defend a claim while retaining the option to deny coverage later. It’s common in construction and property claims, but if ignored, it can leave you responsible for damages. Review the letter carefully, track deadlines, and seek legal help to protect your rights throughout the process.
If you’ve filed a claim with your insurance company and received a letter marked “Reservation of Rights,” pay close attention. It’s not just legal jargon. It could affect whether your claim gets paid. In Florida, a Reservation of Rights (ROR) letter signals that your insurer is investigating your claim but may deny coverage later. And if you don’t respond properly, it can hurt your case.
What Is a Reservation of Rights Letter?
A Reservation of Rights letter is a written notice from an insurance company. It tells you that they’re defending you or processing your claim, but they reserve the right to deny coverage later if it turns out the claim isn’t covered by your policy.
It’s a way for the insurer to protect itself from being forced to pay for something it didn’t agree to cover while still participating in your case for now.
Why Insurers Use Them in Florida
Florida law allows insurance companies to provide a defense under a reservation of rights if there’s any uncertainty about whether the claim is covered. This often happens in construction defect cases, commercial liability disputes, or property damage claims where multiple policies or exclusions may apply.
If the insurance company didn’t send an ROR letter and just defended the claim, they could lose their right to deny coverage later under waiver or estoppel rules.
What Should You Do If You Receive One?
Don’t assume everything is fine just because the insurer is defending you. The ROR letter means they may later say: “You’re on your own for this.”
Here’s what you should do:
- Read it carefully. Understand what parts of your policy the insurer is questioning.
- Check deadlines. The letter may request a response within a specified number of days.
- Don’t ignore it. Silence can be taken as agreement.
- Don’t assume your attorney is handling everything. If you have your own legal team, make sure they’ve seen the letter and respond properly.
Common Scenarios in Florida Claims
- Construction Defects
In construction litigation, general contractors are often sued for issues such as water damage, faulty work, or design flaws. If your commercial general liability (CGL) carrier sends an ROR letter, they may defend you for now, but later deny responsibility for certain types of damage, especially if it’s “your work” versus “property damage.”
- Homeowner Property Claims
In Florida, insurers often send ROR letters in hurricane and water damage claims. They may investigate whether the damage was sudden (covered) or from wear and tear (not covered). The ROR allows them to keep options open.
- Commercial Liability
If your business is sued and you submit a claim, the insurer might raise coverage questions related to intentional conduct, professional services, or prior knowledge. An ROR gives them time to review before accepting full responsibility.
How It Affects Your Defense
Even though the insurance company might provide a defense attorney, that attorney still works for the insurer, not you. If there’s a conflict of interest between defending the claim and your personal liability, Florida courts may allow you to hire independent counsel who is sometimes paid for by the insurer.
This is often referred to as “Cumis counsel” in other states, though Florida doesn’t use that term formally. Still, the concept applies.
ROR Letters Can Lead to Coverage Disputes
Once the claim is resolved, the insurance company may file a declaratory judgment action, asking the court to decide whether it must pay. If they win, you could be left paying the judgment even though they provided a defense.
That’s why it’s important to respond early, keep your own legal support, and track every communication in the case.
Call the Law Office of Ray Garcia, P.A.
If you’ve received a Reservation of Rights letter or think your insurer might deny coverage, don’t wait to find out the hard way. We help clients in South Florida understand what’s at stake and take action to protect their rights. Call us today. We’ll talk to you directly and help you move forward with confidence.
Garcia & Garcia Attorneys at Law
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