Denial of Coverage Letter

Summary

This Denial of Coverage letter illustrates the components of a typical coverage denial issued by an insurance carrier. This letter includes drafting notes. This coverage denial letter is intended for insurance carriers denying coverage for a claim asserted against a policyholder’s third-party coverage when suit has not yet been filed. It should be customized for the facts and circumstances of a claim and the relevant jurisdiction—typically the state where the policy was issued. The coverage denial should not be confused with a coverage disclaimer, coverage declination, or reservation of rights letter. In certain circumstances, carriers may elect to issue a reservation of rights letter in lieu of a coverage denial. This may be appropriate where there is not enough information for the carrier to make a coverage determination, and the carrier instead proceeds with its investigation and/or defense of a claim pending further information or developments. The reservation of rights letter is intended to put the policyholder on notice of applicable parts of the policy that may ultimately be used as the basis for limiting coverage or precluding coverage altogether. A disclaimer of coverage and a declination of coverage apply to entirely different circumstances. For more information, see Denial, Disclaimer, and Declination of Coverage, Denial, Disclaimer, and Declination of Coverage Checklist, Declination of Coverage Letter, Disclaimer of Coverage Letter, Non-Waiver Agreement (Third-Party Claim), Reservation of Rights Letter and Non-Waiver Agreement Drafting Checklist, Reservation of Rights Letter (Third-Party Claim), Coverage Opinions, and Coverage Opinions Checklist. For treatise provisions addressing denials of coverage, see New Appleman on Insurance Law Library Edition § 149.02, New Appleman Insurance Law Practice Guide 32.13, and New Appleman Insurance Law Practice Guide 12.14.