A case reserve is established on an individual claim to reflect anticipated indemnity and expense. Adjusters set the initial reserve on notice and revise it as facts develop, with material changes documented in the file.
It contrasts with bulk reserves set actuarially across a book of claims.
Alternative Names:
Individual Case Reserve, Claim Reserve
Why it Matters?
Reserve changes create a timeline that bad faith plaintiffs read closely, since an increase shortly after a demand was rejected suggests the insurer valued the claim above what it offered. Reserves also drive settlement authority in practice, since authority rarely exceeds the reserve. Defense counsel evaluations feed reserve setting, which is why timely and specific valuations matter operationally as well as ethically.
Frequently Confused with
Related terms
Frequently asked questions
Why do reserve changes matter in bad faith litigation?
Do reserves limit settlement authority?
