When a property claim is reported, there is a natural assumption by all parties that the claim will eventually be paid. The insurance adjuster begins the investigation, and the insured person (the “insured”) starts the process of cleaning up whatever damage has occurred, getting quotes for repair and replacement where necessary. However, questions regarding coverage can occur at any point during the investigation, and the way they are handled may influence the eventual decision to pay or deny the claim.
If a coverage question does arise, the insurance adjuster will likely ask the insured to sign a non-waiver agreement, similar to one found on the Claims Pages website. In a nutshell, the non-waiver agreement is an acknowledgement by the insured and the claims adjuster that a question of coverage exists, and that any further investigation of the claim will not prevent the insurer from denying the claim to anyone claiming coverage under the policy.
Although the non-waiver agreement does not take away any of the rights of the insured, there are circumstances under which an insured may balk at signing the document. This situation usually occurs when the insured is unfamiliar and uncomfortable with the insurance claims legalese, fearful of what rights he may be signing away. However, this refusal to sign can also occur during insurance fraud situations where the insured knowingly submits a false claim.
In the absence of the signed non-waiver agreement, the insurance company cannot continue its investigation without the possibility of prejudicing its right to deny the claim. On the other hand, some state insurance department guidelines require that insurance companies complete their investigation within a specified time period. So how does an insurance company respond the Reservation of Rights letter.
The Reservation of Rights letter (also found on Claims Pages) is an official notice sent to the insured by certified mail that a question of coverage exists and that any further investigation into the claim will not prevent the insurance company from denying the claim. It has essentially the same force as the non-waiver agreement but without the insureds acknowledgement.
To avoid further ill feelings during a questionable claim, it is usually best to meet with the insured, explain the non-waiver, and ask for a signature. The receipt of a certified Reservation of Rights letter will usually close down communication and delay the claim.
