West Virginia Adjusters Practice Exam 2025 - Free Adjuster License Practice Questions and Study Guide

A "reservation of rights" letter is a critical document used by insurers during the claims process. When an insurer issues this letter, it is indicating that while it is accepting the claim for consideration, it may not be fully committed to providing coverage at this point and retains the right to deny coverage after further investigation.

This kind of letter usually arises when there are potential issues concerning the validity of the claim, such as questions about the policy's applicability, the circumstances surrounding the claim, or whether all policy requirements have been met. By sending a reservation of rights letter, the insurer is essentially stating that it will investigate the claim and reserves the right to deny coverage later if warranted by the findings of that investigation. This protects the insurer’s interests while also ensuring that the insured is aware of the potential limitations in the coverage being provided.

In this context, the letter serves a dual purpose: it allows the insurer to move forward with an investigation and keep the claim process on track while signaling to the insured that further examination is needed before a final coverage decision is made.