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A single letter from an insurer or attorney can change the tone of an entire claim or lawsuit. One phrase tends to stand out immediately: reservation of rights. At first glance, it sounds technical. But the practical meaning is straightforward, and knowing it can protect you from making costly decisions without full information. A reservation of rights is a formal notice, most often from an insurance company, stating that it will continue handling a claim while preserving specific legal defenses. It is not a denial, it is not an approval. It is a carefully worded “we are still reviewing this, and we are not giving anything up in the meantime.” In the blog below, you will find a plain-language breakdown of what this notice means, why insurers send it, how it can affect both policyholders and defendants, and what steps are worth taking when you receive one. What is a Reservation of Rights? A reservation of rights is a formal statement made by a party, often an insurance company or defendant. That they will continue handling a claim or participating in a legal matter while preserving certain legal defenses. If an insurer investigates a claim, assigns a defense attorney, or begins paying costs without issuing rights, it can be found to have waived or legally surrendered the right to raise coverage defenses later. Courts have applied the doctrine of estoppel in these situations, meaning the insurer is legally prevented from reversing a position the insured reasonably relied upon. By issuing it, a party avoids unintentionally waiving important legal arguments. This ensures that contractual terms, exclusions, or other defenses remain available if questions about responsibility arise later. One distinction worth understanding from the start: not all reservation-of-rights letters carry the same legal weight. A generic letter that simply states “we reserve all rights […]