Preventative Paperwork: Non-Waiver Agreements, Reservation of Rights Letters and the Defence of Claims in Questionable Coverage Situations


Originally Published 1997
Updated 2005

It is impossible to catalogue every ground upon which an insurer might be able to successfully void a policy or to otherwise deny liability or coverage under the policy. General categorization might be made as follows:

  • breaches of the terms and conditions of the policy;
  • misrepresentations or failure to disclose material information;
  • claims or losses being of the type either excluded from or not falling within the scope of coverage afforded by the policy; and
  • the accrual of a limitation period.

When confronted with grounds for denying coverage, the insurer must elect between denial and affirmation. If affirmation occurs, either expressly or impliedly, then in most cases the insurer will either be deemed to have “waived” its entitlement to deny coverage or, alternatively may otherwise be estopped from asserting a denial. The execution of a Non-Waiver Agreement or the issuance of a Reservation of Rights letter by the insurer is designed to avoid some of the pitfalls of waiver and estoppel. Even assuming any such agreement is enforceable (and in many cases it may not be) the conflict of interest respecting the coverage issue can create ethical traps for unwary counsel retained to defend the liability claim.

This paper addresses the preventative paperwork necessary for the insurer to avoid waiver and estoppel, together with the impact of the coverage dispute on both the liability insurer’s duty to defend and the role of counsel in that regard.

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(PDF Format, 39 pgs)