Page 36 - Reservation of Rights - Special Edition

MICHIGAN
Notice
No statute governs the time required to provide the insured with a coverage position or reservation of rights. The best practice is to provide the insured with a coverage explana- tion as soon as possible after the insurer’s acknowledgement of the claim.
Notice of a reservation of rights to an insured in connection with an insurer providing a defense must be timely in order to avoid an estoppel claim. A letter sent by the insurer on October 6, 1995, reserving its right to deny coverage based on an exclusion in the policy, was timely notice to the in- sured regarding a lawsuit filed on September 14, 1995. City of Grosse Pointe Park v. Mich. Mun. Liab. & Prop. Pool, 702 N.W.2d 106 (Mich. 2005).
A notice of a reservation of rights sent two years after the defense began and seven months before the trial was too late to avoid the presumptive prejudice of both the insured’s and, consequently, the plaintiff’s rights, and therefore was too late to avoid estoppel. Meirthew v. Last, 135 N.W.2d 353
(Mich. 1965).
An insurer’s four-month delay in sending a reservation of rights letter after undertaking the defense is not an un- reasonable length of time and estoppel will not apply. Fire Ins. Exch. v. Fox, 423 N.W.2d 325 (Mich. Ct. App.), appeal denied, 431 Mich. 874 (1988).
An insurer’s initial reservation of rights letter to the insured, sent less than three months into the underlying suit against the insured and shortly after the insurer was informed that the insured had been served in that action, constitutes a timely reservation of rights such that the insurer was not estopped from invoking a contractual basis for denial of coverage. Amerisure Mut. Ins. Co. v. Carey Transp., Inc., 578 F. Supp. 2d 888 (W.D. Mich. 2008).
Content
Notice to an insured that an insurer will provide a defense under a reservation of rights typically states or references the policy language on which the insurer bases its opinion that coverage may not be afforded under the policy. The letter should state that some or all claims against an insured may
2018 ReseRvation of Rights - special edition
MICHIGAN
For more than four decades, Collins Einhorn Farrell PC has provided outstanding legal counsel to clients in diverse practice areas. Our representation of clients focuses on defense litigation in state and federal courts. We are committed to providing knowledgeable and responsive service to our clients. Since our founding in 1971, we have gained an unparalleled reputation for our work and results for both institutional and individual clients nationwide.
Our attorneys are committed to achieving our clients’ goals, and have the ability to adeptly handle our clients’ needs. Our seasoned professionals provide the highest level of legal counsel to our clients, and are recognized as leaders in the legal community. We are honored that when our peers in the legal profession require the services of an attorney, they call upon Collins Einhorn. This affirms the quality and expertise of our legal talent. Long lasting client relationships and consistent referrals are a testament to the firm’s sophisticated, client-centered, legal solutions.
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