However, in certain circumstances, the court authorized the insurer to rely on a letter of reservation. The letter must be carefully drafted to conform to the format accepted by the courts and must contain the same information as required for non-waiver agreements (see page 2 of this document). In Hersh v. Wawanesa Mutual Insurance Co., where a letter of reservation was accepted, the court ruled: A non-waiver clause is the clause in a contract that attempts to preserve the rights of each party, even though some aspects of the agreement may not be respected. In principle, this clause constitutes an additional protection for the applicability of the terms of the agreement. The jurisprudence on non-waiver agreements is such that a validly constructed non-waiver agreement should include the following: Non-waiver provisions can be found in the world of commercial and personal contracts. Depending on the type of contract, the clause is slightly different. In insurance contracts, a waiver clause is introduced to remind the insured person that they retain the right to challenge their insurance coverage even if the insurance company investigates one of their claims. The validity of a retention of title letter depends on the clarity of the explanation of the specific situation, the scope of the information provided, the reasons for the refusal of coverage and the time when the letter is established. It is important to note that courts have been more willing to accept a reserve letter if a non-waiver agreement has been requested but the insured has not executed it. A non-waiver agreement is similar to a conditional letter, but it must be signed by the policyholder to recognize that coverage may not apply due to certain circumstances. The non-waiver agreement is usually issued when the insurer suspects that some or all of the coverages are not applicable.
The non-waiver agreement should include in the policy the reasons why coverage may not apply. A policyholder is not required to sign a waiver agreement. As a general rule, if a non-waiver is submitted and a policyholder does not sign it, then the insurance company will issue a letter of reservation. In the event that the insurer continues its investigation, it could be assumed later that it has waived its right to refuse coverage or that it has prevented it from asserting a refusal. To avoid the pitfalls of renunciation and confiscation, insurance companies have long used non-waiver agreements. A non-waiver agreement can help delay their decision to confirm or deny coverage. See Shelby Steel Fabricators Inc.c. United States Fid. & Guar. Co., 569 So.2d 309, 311 (Ala. 1990) (the language of the non-waiver agreement cited in this case).
An insurer will always prefer to have a non-waiver agreement to allow for the flexibility to meet its obligations under a policy while protecting its own interests. Courts have generally accepted agreements without waiver because they constitute the consent of an insured and allow for the balancing of competing interests. One of the most interesting features of a validly constructed non-waiver agreement is that it gives an insurer the ability to negotiate and settle claims. By retaining the ability to defend against a claim, the insurer can also negotiate a claim settlement on behalf of its insured. This becomes interesting if coverage is subsequently denied, as the insurer also retains the ability to recover such a statement from its insured in the event of non-coverage under the policy. Unlike declarations of reservation, non-waiver agreements are bilateral. When accepting a non-waiver agreement, it can be argued that the policyholder accepts the terms of the insurance company`s defense agreement. Policyholders are not required to enter into an agreement with their insurance company without waiver, and an insurance company cannot force the policyholder to do so in order to provide a defense. In general, an insured person is not required to enter into a waiver agreement and is unlikely to be affected by the refusal to sign such a document. .