Insured Needs to Understand Rights when Receiving Reservation of Rights Letter

If a third-party asserts a claim / lawsuit against you, whether for property damage or personal injury or negligence, you have probably tendered that claim / lawsuit to your liability insurance carrier. The reason you tendered the claim / lawsuit to your liability insurance carrier is because you want the carrier to defend you in connection with the issue and indemnify you for any damages covered under the liability insurance policy.

Chances are that when you tendered the claim / lawsuit to your liability insurance carrier you received a reservation of rights letter from the carrier. This is a letter where the carrier is advising you that the carrier is reserving its rights to assert a coverage defense and any defense it is willing to provide you is subject to a coverage defense(s) as set forth in the reservation of rights letter.

Importantly, Florida has a statute–Fla. Stat. s. 627.426 and called Florida’s Claim Administration Statute—that requires the liability insurance carrier to provide an insured a reservation of rights letter within 30 days after the carrier knew or should have known of the coverage defense. Then, within 60 days of this letter or the receipt of lawsuit against the insured (summons and complaint), but in no event later than 30 days before trial, the insurer must retain mutually agreeable independent counsel to represent the insured.

Insureds that receive such reservation of rights letters—and these letters are very common—need to know their rights under Florida’s Claim Administration Statute. For more information on the rights of an insured, check out this article.


Please contact David Adelstein at or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.


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