Draft Reservation Of Rights Letter

---
name: draft-reservation-of-rights-letter-cgl-product-liability
task_id: insurance/draft-reservation-of-rights-letter
description: Agents drafting a reservation of rights letter produce a generic document that omits accurate factual recitation, fails to reserve rights on occurrence timing uncertainty, does not acknowledge the applicable notice-prejudice rule where relevant, and lacks a general reservation clause preserving unidentified defenses.
activates_for: [planner, solver, checker]
---

# Skill: Draft Reservation of Rights Letter for CGL Insurance Coverage Dispute

## 1. Subject-matter triage (only if applicable)

- This task is a first-party drafting exercise: produce the reservation-of-rights letter itself, not a memo about what it should say.
- Draft the letter from the policy, complaint, tender materials, claims file summary, and counsel instructions, and ensure the final document is the operative deliverable.
- If the source set contains more than one potentially applicable policy period, notice event, insured, claimant, or theory of damage, identify each before drafting coverage positions so the letter does not collapse distinct issues into one generalized reservation.
- The letter should be written as formal insurance correspondence to the insured, with defense counsel copied where appropriate.

## 2. Failure modes the skill is correcting

- The letter states coverage reservations in a conclusory way without tying each reservation to a policy provision, exclusion, condition, or limit.
- The factual recitation is imprecise, omits key claim details, or misstates the tendered event, which undercuts the insurer’s position and invites waiver arguments.
- The letter fails to reserve rights on occurrence timing and policy-period allocation even though property damage or bodily injury timing may be uncertain in a construction or product-liability setting.
- The letter reserves late-notice defenses without acknowledging the governing notice-prejudice rule where applicable.
- The letter omits a catch-all reservation preserving defenses not yet identified.
- The letter does not make clear that the insurer’s defense and investigation are being provided under a reservation of rights.
- The letter fails to address independent counsel or similar conflict counsel rights when coverage positions and defense positions may diverge under governing law.
- The letter reads like a summary of the file rather than a legal reservation letter and therefore fails to preserve all intended defenses.

## 3. Legal frameworks / domain conventions that apply

- A reservation of rights letter serves to notify the insured that the insurer will defend while reserving the right to deny coverage later on specified grounds; under waiver and estoppel principles, failure to reserve a defense can forfeit it.
- Coverage positions should be anchored to the policy language: insuring agreement, definition of occurrence, property damage or bodily injury trigger language, notice and cooperation conditions, exclusions, endorsements, limits, and deductibles or self-insured retentions.
- In occurrence-based liability coverage, timing of injury or damage can determine which policy period is implicated; where the chronology is unclear, expressly reserve rights on inception, progression, manifestation, and allocation issues.
- If late notice is implicated, the letter should recognize the governing notice-prejudice doctrine, such as the jurisdiction’s common-law rule or a statute requiring actual prejudice before denial, while still preserving the defense.
- Defense under reservation of rights may create a conflict that implicates independent counsel or similar protections depending on jurisdictional law and the content of the coverage defenses.
- Investigation, defense, and settlement participation should be stated to be non-waiver conduct and not a concession of coverage.
- Where the source documents identify controlling law, cite that authority directly; if not, use the recognized authority governing the applicable notice, waiver, estoppel, or independent-counsel rule in the jurisdiction.

## 4. Analytical scaffolds

- Start with the correct parties, claim caption, policy number, policy period, and date of tender.
- Recite the underlying allegations accurately and neutrally, using the complaint, tender letter, and file summary; do not embellish facts not contained in the source documents.
- State the insurer’s current position: defense being provided, coverage not yet determined, and rights expressly reserved.
- For each coverage defense or uncertainty:
  - Identify the policy term, exclusion, condition, endorsement, or limit implicated.
  - Explain the factual basis for the reservation in plain but legally precise terms.
  - State that the insurer reserves the right to deny or limit coverage on that ground.
- For timing-based issues, separately reserve rights as to:
  - when the alleged damage or injury occurred,
  - whether any alleged damage falls within the policy period,
  - whether multiple policy periods may be implicated,
  - whether any progressive or continuous damage theory changes allocation.
- For notice-based issues, state the notice defense with jurisdiction-appropriate caution:
  - reserve the defense,
  - acknowledge any requirement to show actual prejudice,
  - avoid stating an absolute forfeiture if the source law requires prejudice.
- Include a section confirming that defense and investigation are being undertaken subject to all policy rights and are not a waiver of any position.
- If applicable law and instructions support it, address the insured’s right to independent counsel or other conflict protections without conceding that such a right necessarily exists in every circumstance.
- End with a broad reservation of all rights, defenses, exclusions, limitations, and conditions not expressly waived in writing.

## 5. Vertical / structural / temporal relationships (only if applicable)

- If the claim involves a layered or time-sensitive coverage question, the letter should separate:
  - policy-period issues from liability issues,
  - notice and cooperation issues from substantive coverage exclusions,
  - defense obligations from indemnity obligations.
- When multiple documents or events bear on coverage, preserve their relationship in chronological order:
  - policy inception and expiration,
  - date of tender and notice,
  - underlying alleged event date(s),
  - filing date of the complaint,
  - current defense posture.
- If the complaint alleges ongoing or progressive damage, reserve rights as to each alleged phase rather than implying a single occurrence date.
- If more than one insured, claimant, project, product, site, or accident is implicated in the source materials, treat each separately to avoid conflating distinct coverage questions.

## 6. Output structure conventions

- Use formal letter format with date, addressee, subject line, and salutation.
- Open by identifying the policy and the underlying matter, then state that the insurer is responding to the tender under a reservation of rights.
- Use a concise factual background section drawn from the source documents.
- Use a separate coverage analysis section with individually labeled reservations tied to policy language.
- Keep each reservation self-contained: policy language, facts, and reserved consequence.
- Include a specific paragraph on occurrence timing / policy-period allocation when timing is uncertain.
- Include a specific paragraph on late notice and the governing notice-prejudice rule when notice is at issue.
- Include a non-waiver paragraph stating that defense, investigation, monitoring, and settlement activity do not waive any rights.
- Include a general reservation clause at the end preserving all rights not expressly waived.
- If counsel instructions require a response deadline or next-step instruction, state it clearly in the body of the letter.
- Deliver the completed letter as the operative file; do not substitute a summary or outline for the letter itself.