Non-Waiver Agreement
(Third-Party Claim)

Summary

This Non-Waiver Agreement (Third-Party Claim) form is a bilateral contract between an insurer and a policyholder in which an insurer asserts potential defenses to coverage, requests that the policyholder acknowledge them, and memorializes the insurer’s position. The policyholder’s signature does not assent to the correctness of the insurer’s position but acknowledges that the insurer is not waiving its coverage defenses. Reservation of rights letters are similar to non-waiver agreements but are unilateral actions taken by an insurer by which it reserves its rights to deny or limit coverage for a claim, albeit undertaking or continuing to defend the policyholder. A non-waiver agreement may also be used in lieu of a reservation of rights letter in first-party claims. Whether an insurer uses a reservation of rights letter or a non-waiver agreement to assert its coverage defenses is, in part, based on the prevailing law of the jurisdiction. While most jurisdictions permit an insurer to use a unilateral reservation of rights letter, some states, by statute or case law, require that the policyholder agrees to the insurer’s reservation of rights for it to be effective. In both cases, the function of the insurer’s action is to raise questions about the applicability of coverage based upon the facts of the underlying occurrence. Because a non-waiver agreement is a bilateral contract, the policyholder and the insurer may negotiate its terms and scope. If they cannot reach an agreement or if the policyholder refuses to sign one under any circumstances, the insurer may seek a declaratory judgment about its obligations to the policyholder. Whether you represent a policyholder or an insurer, before entering the process of negotiating the terms of a proposed non-waiver agreement, research is necessary into the governing law of the jurisdiction as the law may obviate the need for a non-waiver agreement. One of the reasons is that some states have statutes that specifically deal with the administration of claims. An example is Florida’s claims administration statute that provides that none of the following acts by an insurer will be deemed a waiver of any policy provision or of any defense of an insurer: • Acknowledgment of the receipt of a notice of a loss or a claim • Furnishing forms for reporting a loss or a claim, giving information about it, or acknowledging receipt of competed or uncompleted notices of loss or claim –and– • Investigating a loss or claim or engaging in negotiations looking toward a possible settlement of a loss or claim Fla. Stat. § 627.426 When representing a policyholder in a coverage matter in a jurisdiction that has a statute like this, no purpose may be served in entering into a non-waiver agreement unless you can negotiate a more favorable scope for your client than the statute provides. When representing an insurer in that jurisdiction, you have to be mindful that any terms you suggest or offer for the non-waiver agreement must be at least as favorable as those rights conferred by statute. Otherwise, regulatory sanctions and civil liability may come to bear. For more information, see Reservation of Rights Letter and Non-Waiver Agreement Drafting Checklist, Denial, Disclaimer, and Declination of Coverage, Denial, Disclaimer, and Declination of Coverage Checklist, Declination of Coverage Letter, Denial of Coverage Letter, Disclaimer of Coverage Letter, Reservation of Rights, Reservation of Rights Letter (Third-Party Claim), Coverage Opinions, and Coverage Opinions Checklist.