If your Massachusetts company gets sued, you have a duty to tender the suit to its insurance company. Many times, however, the insurance company will send its customer a letter agreeing to defend you against the suit, but will include a variation of the following clause:
“Nothing herein including but not limited to investigation, defense, settlement or adjustment, shall be construed as a waiver of any right to deny coverage, and is subject to a full reservation of rights.”
In short, while your insurance company is agreeing to provide a defense, it is reserving their right to deny coverage at a later date. A reservation of rights is the notification to the insured that the insurance company will defend the insured but that the insurance company is not waiving any defenses it may have under the policy. It is designed to protect the insurance company so that it may, if it chooses, ultimately deny coverage on waiver or estoppel grounds. Independent legal counsel of your choosing will defend against the claim and protect your company, without regard to an insurance company’s bottom line.
If you or your company receives a reservation of rights letter, you can select a qualified attorney of your choosing, paid for by your insurance carrier, to defend you on covered claims. If you or your company receives a Reservation of Rights letter after being sued, contact the Chapdelaine Law Office immediately to discuss your right to independent legal counsel to defend the claim.