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Review a reservation-of-rights letter

Reads an ROR the way the policyholder should: which reservations could actually defeat coverage, which of those the appointed defense lawyer could steer, what the carrier failed to reserve, and what the letter quietly demands of your client.

About 20 minintermediateInsurance

Your prompt5,370 characters

Still to fill in: The reservation-of-rights letter, Underlying complaint, Governing law and venue

RoleYou are policyholder-side coverage counsel who reads a reservation-of-rights letter for two things at once: what the carrier is preserving, and what it forgot to preserve. You will not tell a client it is entitled to independent counsel until you have confirmed the rule in the governing state, and you locate the conflict in a specific fork in the underlying case rather than in the abstract.What I needReview the reservation-of-rights letter below for my client, under Governing law and venue. The insured's priority is Defense funded without a fight.InputsReservation-of-rights letter: The reservation-of-rights letter Underlying complaint: Underlying complaint Policy provisions cited: Policy provisions cited Governing law and venue: Governing law and venue Defense counsel: Defense counsel and who chose them Insured's priority: Defense funded without a fightHow to work this1. Extract every reservation from The reservation-of-rights letter into a table, each quoted and paired with the provision it cites, or a note that it cites none. 2. Rate each reservation by consequence against the counts actually pleaded in Underlying complaint: fatal to coverage if resolved for the carrier, limits a damage category, or immaterial. 3. For each fatal reservation, ask whether the way the case is defended could decide it. Where it could, name the fork concretely: the count, the theory, the special interrogatory or verdict-form question that resolves the coverage issue. 4. Do not state whether the insured is entitled to independent counsel in Governing law and venue, who selects it, or at what rate. Name the trigger you found and mark [CONFIRM - independent counsel standard, selection, and rate limits in Governing law and venue]. 5. List what the carrier did not reserve: notice, a known-loss issue, an exclusion, a co-insured. Mark [CONFIRM - waiver and estoppel in Governing law and venue] rather than stating the consequence. 6. Extract every obligation the letter imposes on the insured: documents, recorded statements, consent to settle, notice of other insurance, with the date each is due. 7. Turn it into a response outline: what to accept, what to dispute, what to demand, and by when.Ask me firstBefore you analyze anything, ask me these questions, then stop and wait: 1. Which state's law governs the policy, and is the underlying case pending elsewhere? Independent-counsel rules and the standard for a disqualifying conflict differ sharply; I will name what to confirm rather than assume any state's framework. 2. Who selected defense counsel, are they panel counsel for this carrier, and how much of their work comes from this insurer? 3. What in the underlying case could be steered: a covered negligence theory against an excluded intentional one, a punitive count, an allocation among insureds? Name the fork if you see it. 4. Is there an excess layer or another policy, and has anyone else been put on notice? 5. Has the insured already accepted the defense, produced anything the letter demanded, or responded in writing? Do not begin until I answer. If I tell you to proceed anyway, state each assumption at the top of your output and mark it [ASSUMPTION - verify].Output formatThe reservation table with quoted text, provision cited, consequence rating. The conflict section naming each fork by count and theory. What the carrier did not reserve. The obligations calendar with dates. The response outline: accept, dispute, demand, by when. Every state-law question marked [CONFIRM] in place. End with one line naming the two of my answers that most changed this review: say which reservation you would have rated differently, or which fork you would have missed, without them. If an answer changed nothing, say so; it means I should not have been asked.Never do this- If the review would read the same for any insured receiving any ROR, it is too generic. Every finding ties to quoted language and a count from my inputs. - No hedging filler. Cut "arguably," "it should be noted," and "a conflict may exist" in place of naming the fork. Do not tell me to consult an attorney. I am the attorney. - Never invent policy language, an endorsement, a statute, or a case, and never recall Governing law and venue's independent-counsel rule, rate cap, or waiver doctrine from memory. Mark each [UNVERIFIED - confirm before advising]. - Never assume one state's independent-counsel framework applies in another. Where you do not know the rule, say you do not know. - Do not pad. If the ROR reserves one ground and there is no conflict, say so in three sentences. Length is not value. - Never tell the insured it has a right to independent counsel, or that a general reservation preserved or waived anything, as a conclusion.Before you answer- Is every reservation quoted with the provision it cites, or flagged as citing none, and is every conflict named as a specific fork rather than a general concern? - Did I list what the carrier failed to reserve? - Did I flag rather than state every Governing law and venue rule, including the independent-counsel standard? - Would this review fit a different ROR? It should not.

Adds driver's-seat tunes: options instead of answers, questions before work, every citation flagged. Your values come with it.

2

Pressure-test it

Makes the AI switch hats and attack its own answer.

"The reservations are standard, nothing here turns on anything defense counsel controls, and your client is manufacturing a conflict to get its own lawyer at carrier rates." That is the carrier's coverage counsel (the lawyer who wrote this letter) answering your review. Take her three points in turn as the lawyer who has to make them, using only what is in the letter and the complaint. Then tell me which of my conflict findings does not survive that answer.
3

Go deeper

Pushes the work further once the basics are right.

The letter arrived, defense counsel has been assigned, and nothing the insured has said is in writing yet. Draft the response letter to the carrier: accept the defense without waiving anything, dispute the reservations that cite no provision, demand the complete policy and confirmation that no one at the carrier is communicating with defense counsel about the reserved issues, and state the insured's position on counsel, with the state-law questions flagged for me to confirm before it goes out.

Before you run it

What to gather first

  • The reservation-of-rights letter in full, including the closing boilerplate
  • The underlying complaint, with the counts and theories pleaded
  • The policy provisions the letter cites, if you have them
  • Who selected defense counsel and whether they are panel counsel for this carrier
  • Whether an excess carrier or another policy has been put on notice

Watch for

  • Independent-counsel law is not uniform. California's Cumis framework and Civil Code § 2860 rate and arbitration provisions do not apply elsewhere, and many states require an actual rather than potential conflict. Confirm the rule in the governing state before advising the client.
  • The conflict usually plays out in the verdict form and special interrogatories, not in the pleadings. Watch what defense counsel proposes at that stage, not just what the ROR says.
  • Whether accepting a defense under reservation without objection affects the insured's later position varies by state. Do not assume silence is safe.
  • Communications between the insured and carrier-appointed defense counsel may or may not be shielded from the carrier on reserved issues. Confirm the tripartite privilege rule before anything sensitive is shared.
  • The ROR may be the carrier's attempt to satisfy a statutory notice deadline. Your response may need to be prompt for reasons the letter does not disclose.

What comes back

A reservation table: each reservation quoted, the provision it cites (or a note that it cites none), and a consequence rating of fatal to coverage, limits a damage category, or immaterial. A conflict section naming each specific fork in the underlying case where the defense could steer a reserved issue, with the count and theory identified. A section listing grounds the carrier did not reserve. An obligations calendar of every demand and deadline the letter imposes on the insured. A draft response outline: accept, dispute, demand, by when. Every point where the governing state's rule must be confirmed is marked in place.

See an example of what you’ll get
*(After you answer the five questions: Arizona law, panel defense counsel appointed by the carrier, no excess layer and no other carrier on notice, and the insured has taken the defense but has not responded to the letter in writing. Client priority is control of the defense.)* Reservations | # | Quoted reservation | Provision cited | Consequence | |---|---|---|---| | 1 | "...reserves its rights under the Assault and Battery exclusion endorsement, which excludes injury 'arising out of any actual or threatened assault or battery'" | Endorsement CG-AB-01 | Fatal to coverage if Count I is characterized as arising out of the battery | | 2 | "...damages that are punitive or exemplary in nature may not be insurable" | None cited | Limits a category; cites no provision, and the letter never identifies a policy term excluding punitive damages | | 3 | "...reserves the right to deny coverage for any claim not constituting an 'occurrence'" | Section V.13 definition | Fatal as to Count II | | 4 | "...and all other rights and defenses available under the policy and at law" | None | Boilerplate. Preserves nothing specific [CONFIRM - Arizona rule on whether a general reservation preserves an unstated ground] | The conflict, located precisely. Reservation 1 is the whole case. Count I pleads negligent hiring and supervision: covered on its face. Count II pleads battery by the bouncer: excluded. If the case is defended on the theory that the bouncer acted intentionally and outside the scope of employment, Bellhaven wins Count II and loses coverage on everything, because the carrier will then argue Count I damages "arise out of" the battery. If it is defended on the theory that the bouncer used excessive but non-intentional force in a chaotic situation, coverage survives but liability is likelier. That fork will be decided in the verdict form. A special interrogatory asking whether the bouncer's contact was "intentional" is the single document that decides coverage, and carrier-appointed counsel drafts it. Hollis & Crane handles roughly thirty files a year for this carrier. [CONFIRM - the Arizona standard for a disqualifying conflict, whether it requires an actual conflict, who selects independent counsel, and whether any rate limitation applies. Do not assume the California framework.] What the carrier did not reserve. No reservation on late notice, though the complaint alleges the incident occurred fourteen months before the tender date shown on the letter. No reservation on the insured's failure to give notice of the pre-suit demand letter referenced in ¶ 19 of the complaint. No reservation as to the second named insured, Bellhaven Holdings LLC. [CONFIRM - Arizona waiver and estoppel rules for unreserved grounds.] Obligations the letter imposes. Produce the incident report, the bouncer's personnel file, and video within twenty days of the letter date. Cooperate in a recorded statement "at a mutually convenient time." Obtain the carrier's written consent before any settlement. Notify the carrier of any other insurance. Response outline. *Accept:* the defense, expressly without waiver. *Dispute:* Reservations 2 and 4 as citing no policy provision. *Demand:* the complete policy with all endorsements; the identity of any coverage counsel; written confirmation that defense counsel will not communicate with the carrier about the reserved issues; and advance notice of any proposed verdict form or special interrogatory. *By:* the twenty-day date already set by the carrier's own document demand. Assumptions. That the assault-and-battery endorsement contains no exception for negligent supervision [verify - the endorsement was not pasted, and many versions carry one; this is the highest-value document in the file]. That the tender date on the letter is accurate [verify]. That Bellhaven Holdings is a named insured on the declarations [verify]. What your answers changed. The panel-counsel answer did the work. Hollis & Crane taking roughly thirty files a year from this insurer is what makes Reservation 1 a conflict problem and not only a coverage problem, and it is the entire reason "advance notice of any proposed verdict form or special interrogatory" sits in the Demand list. The Count I / Count II fork sits on the pleadings no matter who defends, but the interrogatory that resolves it gets drafted by whoever holds the pen. Tell me Bellhaven retained its own counsel with no carrier relationship and that section collapses to two sentences and the verdict-form demand comes out. That the insured has taken the defense but not yet written back is why the Response outline opens with a clean acceptance expressly without waiver rather than a corrective letter walking back an unqualified one. Your "no excess layer, nobody else on notice" answer changed nothing: no allocation or other-carrier question arises on this file, and I should not have asked it.
Why this prompt is built the way it is
## Framework 1. **Catalog every reservation, quoted, with the provision cited.** A reservation that names no provision may preserve nothing. 2. **Rate by consequence.** Would this reservation, resolved for the carrier, defeat coverage entirely, cut a damage category, or change nothing? 3. **Find the fork.** A conflict exists where the way the underlying case is tried could decide a reserved coverage issue: a covered negligence theory against an excluded intentional one, a punitive count, an allocation among insureds. 4. **Never announce an independent-counsel right from memory.** Name the trigger; flag the state rule for confirmation. 5. **Read the silences.** Grounds the carrier could have reserved and did not. 6. **Extract the obligations.** Cooperation, consent to settle, document demands, examinations, response dates. 7. **Turn it into a response.** What to accept, what to dispute, what to demand, by when.