"Generic," "Cut-And-Paste" Reservation Of Rights Letter Ineffective

Insureds won a round the other day when the South Carolina Supreme Court held that reservation of rights letters, which it characterized as nothing but "generic statements of potential non-coverage coupled with" large portions of the policies inserted "cut-and-paste" fashion, were ineffective to preserve the carrier's coverage defenses.  The case is Harleysville Group Insurance v. Heritage Communities, Inc.

The letters, said the Court, "included no discussion of" the carrier's coverage position, "or explanation of its reasons for relying thereon."  The Court declared that an ROR letter, to be effective, must be "unambiguous, . . . specify[ing] in detail any and all bases upon which [the carrier] might contest coverage. . . ."