What term describes a bilateral agreement protecting the rights of both the insurance carrier and the insured, and the result of both parties discussing that there may be coverage issues?

What term describes a bilateral agreement protecting the rights of both the insurance carrier and the insured, and the result of both parties discussing that there may be coverage issues?

• A. Reservation of Rights letter
• B. Non-waiver agreement
• C. Self-administered Plan
• D. Recovery

Answer: (B)

When there may be questions about whether the policy covers a claim, a non-waiver agreement is used. It’s a bilateral arrangement between the insurer and the insured that allows the insurer to defend the insured while explicitly preserving both parties’ rights to challenge or determine coverage later. The insured benefits by getting defense and assurances that the insurer’s defense isn’t a concession that coverage exists. The insurer benefits by keeping the option open to deny or limit coverage after the defense has been provided, without implying a waiver of rights through the ongoing defense. This differs from a reservation of rights letter, which is a one-sided notice from the insurer to the insured indicating potential coverage questions but not creating a mutual agreement. The other options don’t fit the scenario of a mutual, rights-preserving agreement arising from discussions about coverage issues.

When there may be questions about whether the policy covers a claim, a non-waiver agreement is used. It’s a bilateral arrangement between the insurer and the insured that allows the insurer to defend the insured while explicitly preserving both parties’ rights to challenge or determine coverage later. The insured benefits by getting defense and assurances that the insurer’s defense isn’t a concession that coverage exists. The insurer benefits by keeping the option open to deny or limit coverage after the defense has been provided, without implying a waiver of rights through the ongoing defense.

This differs from a reservation of rights letter, which is a one-sided notice from the insurer to the insured indicating potential coverage questions but not creating a mutual agreement. The other options don’t fit the scenario of a mutual, rights-preserving agreement arising from discussions about coverage issues.