Page 43 - Reservation of Rights - Special Edition

NEW JERSEY
Notice
A reservation of rights letter must be timely. Shotmeyer v. N.J. Realty Title Ins. Co., 948 A.2d 600, 609 (N.J. 2008). Once an insurer has had a reasonable opportunity to inves- tigate, or has learned of grounds for questioning coverage,
it then is under a duty promptly to inform its insured of its intention to disclaim coverage or of the possibility that cover- age will be denied or questioned. Griggs v. Bertram, 443 A.2d 163, 168 (N.J. 1982).
Content
An insurer’s reservation of rights must fairly inform the insured of the insurer’s position. The letter should identify the relevant defense or policy provision that the insurer will rely on. Gen. Acc. Ins. Co. v. N.Y. Marine & Gen. Ins. Co., 727 A.2d 1050, 1052 (N.J. Super. Ct. App. Div. 1999); Hanover Ins. Grp. v. Cameron, 298 A.2d 715, 718 (Ch. Div. 1973). That is, an insurer should set out all of the reasons of which it is aware, or should be aware at the time it issues the reserva-
tion of rights letter of why the insured might not be entitled to coverage. Battista v. Western World Ins. Co., 545 A.2d 841, 846 (N.J. Super. Ct. Law Div. 1988), aff’d and rev’d in part, 594 A.2d 260 (N.J. Super. Ct. App. Div.), certif. denied, 606 A.2d 366 (1991).
In addition, a reservation of rights letter must specifically inform the insured that the offer to defend subject to the in- surer’s right to later disclaim indemnity may be accepted or rejected by the insured. Sneed v. Concord Ins. Co., 237 A.2d 289, 293-294 (N.J. Super. Ct. App. Div. 1967). An insurer may not reserve its rights by unilateral action. If the carrier wishes to control the defense and simultaneously reserve a right to dispute liability, it can do so only with the consent
of the insured. An agreement may be inferred from an insured’s failure to reject an offer to defend on those terms, but to spell out acquiescence by silence, the letter must fairly inform the insured that the offer may be accepted or rejected. Merch. Indem. Corp. v. Eggleston, 179 A.2d 505 (1962).
If further investigation is required to ascertain whether coverage is available, the letter should state that the insurer
2018 ReseRvation of Rights - special edition
NEW JERSEY
Shafer Glazer is a recognized leader in the field of Insurance and Corporate Liability Defense. Our firm has not only received Martindale-Hubbell’s® highest rating of AV® Peer Review Rated, but also is listed in the Martindale-Hubbell® Bar Register of Pre-Eminent LawyersTM in the areas of Insurance Defense, Labor and Employment and Workers Compensation. In addition, A.M. Best has placed Shafer Glazer in its Directory of Recommended Insurance Attorneys. Our attorneys are Members of The Council on Litigation Management and hold the position of New York State Chair.
Shafer Glazer has extensive experience working with insurance companies, policy holders, third party administrators, captives, risk retention groups and large self-insured companies. Because of our depth of knowledge, our attorneys have been invited as speakers for business associations, municipal hearings and continuing education on topics relevant to our clients and insurance companies in New York and New Jersey.
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