Law360, New York ( June 25, 2015, 11:54 AM EDT) -- Most courts hold that an insurance company will not be estopped from denying coverage, even if the insurance company participates in the defense, provided it gives timely notice to the policyholder through a reservation of rights letter. There is one very important caveat. In order for the reservation of rights to be effective, it must be both timely and sent directly to the policyholder for whom the defense is provided. As shown in the recent case of Erie Insurance Exchange v. Lobenthal, (Pa. Super. Ct. Apr. 15, 2015), when an insurance company fails to give a policyholder adequate notice of its reservation of rights, the insurance company will be estopped from disclaiming coverage as to that policyholder....