Legal Question in Insurance Law in Massachusetts

What does the term ''Reservation of Rights'' mean

Two years ago, I had my outside deck rebuilt. One of the contractor's workers fell of a contractor ladder and injured himself. The contractor told us not to worry since he was fully insured. Haven't heard anything since. Two weeks ago, I received a letter from the injured workers attorney stating we were being sued by him. Since I didn't contact my insurance company at the time of the incident to, at least, make them aware of what had happened, my insurance company is proceeding with ''Reservation of Rights''. What does that mean? Am I going to lose my home?

Thanks.


Asked on 9/05/01, 1:32 pm

1 Answer from Attorneys
Charles Cobb Charles Cobb, Attorney At Law

Re: What does the term ''Reservation of Rights'' mean

Hi,

This is a good question. When you pay premiums, the insurer agrees to do two things: defend and pay covered claims. The defense is often more valuable than the indemnity.

What the reservation of rights letter is telling you they will defend but the question of their paying is a question.

What you should do is contact a lawyer who knows about insurance coverage to enter an appearance for you and monitor the case. The job of this attorney for you will be to press to insurer to honor your claim and the threaten the insurer with a bad faith action if they hang you out to dry.

I expect if you hire an attorney you will not loose your house.

Best wishes.

Charles W. Cobb

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Answered on 10/25/01, 8:53 am


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