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What does a reservation of rights letter mean?

On Behalf of | Oct 2, 2023 | Erisa

You filed your long-term disability (LTD) claim and did everything you were expected to do – and you eventually started to receive payment, although it came along with a “reservation of rights” letter.

What does this mean for you and your claim? This is a common situation that people run into with long-term disability claims.

Your claim isn’t actually approved – yet

Essentially, the insurance company is notifying you that, while they have started paying your benefits, they are not entirely sure that your claim is covered. Some doubts or uncertainties about your claim exist, so the insurance company is still investigating. 

The reservation of rights letter is your formal notification that the insurance company is reserving its right to ultimately deny your claim in the future if they determine that your claim doesn’t qualify under the terms of your policy for any reason. 

Typically, these letters include information that will at least give you some idea of what the concerns may be. Among other things, the concerns may include:

  • Some difficulty obtaining some of your medical records or information they need from your medical providers 
  • Questions about the nature of your disability, including whether or not it meets the insurer’s definition of a long-term disability 

Once the insurance company finishes its review of your claim, they can either end their reservation of rights or they can deny your claim. If they deny your claim, your benefits will stop.

It can be nerve-wracking to not know if the source of your financial stability will be yanked out from under your feet very suddenly. If you’re unsure about what’s happening with your long-term disability claim, it may be wisest to get some legal guidance that’s specific to your situation.