Which remedy can be used to deal with disputes in the insurance claims process?

A reservation of rights letter is an important tool used in the insurance claims process to address disputes. This type of letter is issued by an insurance company to inform the policyholder that while they are investigating the claim, they do not waive their right to deny the claim later based on specific policy terms or exclusions.

This remedy is particularly useful in situations where the insurer may have concerns about the validity of the claim. By issuing a reservation of rights letter, the insurer can proceed with their investigation and claim handling while explicitly stating that certain issues or concerns may affect their ultimate decision regarding coverage. This protects both the insured's interests and the insurer's potential liability, facilitating clearer communication and understanding between the two parties.

In contrast, other options such as a lapse of coverage or a claim denial do not serve as remedies for disputes; instead, they reflect adverse outcomes for the insured. A premium adjustment relates to changes in the pricing of the insurance policy but does not directly address the resolution of claims disputes. Thus, the reservation of rights letter is an essential part of managing potential conflicts during the claims process.