You check your mailbox and see a letter from the insurance company.

Inside is a cold, legal-sounding document with a bold headline:

“Reservation of Rights.”

It doesn’t say your claim is denied. It doesn’t offer a settlement. It doesn’t explain much at all.

So what is this letter really saying? And what does it mean for your case?

If you’ve suffered a serious injury and received a reservation of rights letter, here’s what you need to know—before it’s too late.

What Is a Reservation of Rights Letter?

A reservation of rights letter is a formal notice from the insurance company stating:

They are investigating your claim
They will defend or process your claim for now
But they may later deny coverage for all or part of it

In plain English: “We’re reserving the right to protect ourselves.”

It’s the insurance company’s way of saying, “Don’t assume we’re going to pay you just because we’re talking to you.”

Why Do Insurance Companies Send Reservation of Rights Letters?

They’re protecting their position.

A reservation of rights letter allows insurers to continue communications or even start negotiations without giving up the ability to:

Deny the claim later
Limit what they’ll cover
Avoid setting a legal precedent
Use your responses against you

In essence, they’re playing both sides—staying involved while keeping the escape hatch open.

Common Reasons You Might Receive a Reservation of Rights Letter

Disputes over how the accident happened
Uncertainty about whether the policy covers the incident
Suspicion of pre-existing injuries
Allegations of fraud or misrepresentation
Late reporting of the claim
Gaps in medical documentation
Legal questions about who was at fault or which policy applies

The letter itself rarely explains the real reason. That’s intentional.

Does a Reservation of Rights Letter Mean Your Claim Will Be Denied?

Not necessarily—but it’s a red flag.

This letter means the insurer is setting the stage for one of two outcomes:

They deny your claim, or
They offer a low settlement based on limited coverage

Either way, it’s a sign they’re not planning to pay full value.

The letter may sound generic. But it usually means your claim has entered a higher risk category inside the company’s system.

Real Case Example: TBI Claim Nearly Blocked by Policy Language

A client suffered a traumatic brain injury in a highway collision caused by a company truck. The insurer sent a reservation of rights letter within two weeks.

They claimed the driver might not have been “within the scope of employment,” which could limit the company’s liability.

Our legal team investigated and uncovered GPS logs showing the driver was on the clock and running a company errand.

The insurer withdrew the letter—and paid out a substantial settlement.

🔗 Learn how we handle TBI cases involving complex liability:
https://flanagan.law/practice-areas/traumatic-brain-injuries/

How Should You Respond to a Reservation of Rights Letter?

Do Not Ignore It
This letter is a warning shot. Silence only helps them.
Do Not Call the Adjuster to “Clear It Up”
Everything you say can be used to justify denial or underpayment.
Do Not Provide More Information Without Legal Review
You could unknowingly confirm their suspicions or weaken your position.
Do Contact an Attorney Immediately
We interpret the letter, investigate its basis, and begin protecting your rights.
Start Preserving Documentation Now
Emails, medical records, photos, timelines—everything matters.

What If You Already Responded to the Letter?

It’s not too late—but time matters.

If you’ve already called or emailed the insurer about the letter, bring that communication to your attorney. We can still build around it—but the window to take strategic action narrows every day.

What the Insurance Company Hopes You’ll Do

Assume the letter is harmless
Say too much in a call or email
Fail to consult an attorney
Accept a reduced payout
Miss deadlines or fail to appeal correctly

Don’t take the bait.

What an Experienced Attorney Does Next

At Flanagan Law, we respond quickly and decisively:

Demand clarification of the insurer’s position
Submit documentation that undercuts denial attempts
Identify gaps in their policy interpretation
Preserve your rights while limiting exposure
Use the letter to build a potential bad faith case if they mishandle the claim

Sometimes, just our presence is enough to change their tone.

Can a Reservation of Rights Letter Be Used Against You?

Yes. That’s part of why it exists.

If you fail to respond—or respond poorly—it may appear that you accepted the insurer’s position or waived certain rights.

They may also try to use your recorded responses to justify policy exclusions or partial coverage.

Your best move is to say nothing until you speak with counsel.

Does This Only Happen in Car Accident Cases?

No.

Reservation of rights letters are used across all types of injury claims, including:

Trucking accidents
Motorcycle crashes
Slip-and-falls
Wrongful death
Rideshare and delivery driver incidents
Commercial property injuries

Anywhere there’s a policy in dispute, expect this tactic.

Sources & Further Reading

Colorado Division of Insurance – Rights in Liability Claims
Insurance Information Institute – Understanding Claim Denials
American Bar Association – Use of Reservation of Rights in Coverage Disputes
Colorado Revised Statutes – CRS § 10-3-1104: Unfair Claim Practices
Journal of Insurance Law – Tactical Use of ROR Letters in Injury Claims

Frequently Asked Questions

Does a reservation of rights letter mean my claim is being denied?
No—but it often signals that a denial or limited offer may follow. It’s a serious warning.

Can I get compensation after receiving this letter?
Yes, especially with legal help. We’ve recovered large settlements in cases that began with ROR letters.

How quickly should I respond?
Immediately. The longer you wait, the more leverage the insurer builds.

Can I sue if they deny coverage after sending this letter?
Yes, especially if the denial is unreasonable or contradicts policy terms. Bad faith laws may apply.

Call Flanagan Law now at 720-928-9178 for your free, no-obligation consultation.
Or Contact Us to understand what this letter really means—and how to fight back before it’s too late.