An insurance company's reservation of rights is a declaration that they intend to reserve all of their legal rights. This acts as a reminder that they are not giving up their legal rights to take action at a later time. Reserving your rights means that you are not surrendering any of your legal rights, but also doesn't mean that the insurance company can't settle the case. It is important for you to know exactly what your insurance company is reserving its rights about because if they try to deny coverage or go after you for a large sum of money, you want to make sure you are protected. Reservations of rights often appear in policies as a list of cases where the insurer intends to assert defenses based on facts outside the four corners of the underlying complaint. For example, an insurer may reserve its right to deny coverage for damage caused by natural disasters like hurricanes or earthquakes. Or, it may reserve its right to deny coverage if the injury occurred while the person was intoxicated. There are many other examples that could be given. The key point is that the reservation of rights tells you that there are potential defenses available to the insurance company and gives you fair warning that future decisions may be made regarding coverage without your input. In general, parties will always try to resolve their disputes before going to court.