Which document is an insurer's notice that identifies coverage issues and indicates the insurer may deny coverage later if facts warrant it?

• A. Reservation of rights letter
• B. Nonwaiver agreement
• C. Statutes of fraud
• D. COD (collect on delivery)

Answer: (A)

A reservation of rights letter is a notice an insurer sends when it starts defending a claim but has potential coverage issues to reserve the right to later deny or limit coverage if the facts show noncovered loss or policy exclusions. It lets the insured know that the defense is being provided under a reservation of rights, so the insurer can continue its investigation and defense without waiving any defenses to coverage. This protects the insurer's position while keeping the insured informed that coverage could be denied or narrowed as facts emerge.

The other items don’t fit. A nonwaiver agreement is an arrangement about avoiding waiver of rights through conduct, not a notice of possible coverage denial. Statutes of fraud are a legal rule about which contracts must be in writing, not a notice from an insurer about coverage issues. COD, or collect on delivery, is a payment method and has no relation to insurance coverage notices.