Crafting Coverage Position Letters and Evaluating Impact of Insurer's Defense Under Reservation of Rights

This CLE webinar will discuss how counsel can draft valid coverage position letters (CPLs) without waiving defenses when proceeding under a reservation of rights (ROR). The program will also discuss how policyholder counsel receiving a CPL should review, analyze, and, if necessary, respond to a CPL. The program will discuss critical issues that arise from a defense under an ROR, including the insurer's possible right to reimbursement of defense costs, potential conflicts of interest, control of the defense, and the impact of an ROR on defenses not explicitly waived.

A CPL communicates to the policyholder the insurer's position regarding coverage for claims. A CPL is often the first and possibly most crucial communication the insurer sends or the policyholder receives. When the CPL is written, facts are few and knowledge is incomplete.

A CPL should timely and fully disclose the insurer's coverage defenses to the policyholder. The letter must state that if the insurer denies coverage or provides a defense while seeking a declaratory judgment then no coverage exists.

A well-drafted CPL can help establish that the carrier has acted in good faith and that the carrier maintains control of the defense. An insufficient CPL can waive defenses, invite extra-contractual damages, or waive the attorney-client privilege.

An effective CPL, especially an ROR letter, must do more than recite facts and list verbatim policy provisions. The letter must connect the specific facts to support the potential lack of coverage in plain English. Failure to do so will waive coverage defenses.

If the letter does not meet specific standards, it jeopardizes the insurer's right to reimbursement of defense costs, even if it later prevails on the coverage issue. Counsel must raise certain matters, including potential conflicts of interest, control of the defense, and the impact of an ROR on defenses that are not explicitly waived.

Listen as the panel guides counsel who draft CPLs on crafting a valid CPL and avoiding waiving defenses when proceeding under an ROR and practitioners who advise clients receiving CPLs on their effect.