A reservation of rights letter is a written notice from your insurance company stating that they will investigate and potentially defend a claim, but they reserve the right to deny coverage later if the investigation reveals the claim falls outside your policy's coverage. When you receive a reservation of rights letter, it means your insurer has identified potential coverage issues but is not yet denying the claim outright. They are putting you on notice that they may not ultimately pay.
For roofing contractors, reservation of rights letters commonly arise in situations involving faulty workmanship allegations, contractual disputes, claims made after policy expiration, and incidents where the contractor's operations may have crossed into excluded activities. For example, if a property owner sues you for a leaking roof and your insurer suspects the damage resulted from intentional cost-cutting rather than an accident, they might issue a reservation of rights while they investigate whether the loss was truly an "occurrence" under the policy.
If you receive a reservation of rights letter, take it seriously. You have the right to hire your own attorney at the insurer's expense in many jurisdictions when a conflict of interest exists between you and the insurer. Do not ignore the letter or assume your insurer will ultimately pay. Respond promptly with any requested documentation, notify your insurance broker immediately, and consider consulting with a coverage attorney to understand your rights. A reservation of rights letter does not mean your claim is denied; it means the insurer is protecting their option to deny while they gather more information.