Coverage and position
Coverage Analysis Memo Template & Example
Last updated 2026-08-03
This one is not sent. It is the internal document the position letters are extracted from, and the reason to write it separately is that the discipline it imposes does not survive contact with an external audience. In a memo you can write the question is undetermined and set out both readings. In a letter you are already choosing words for someone who may disagree with you, and the reasoning quietly reshapes itself around the conclusion.
The structure is the argument: facts found, provision engaged, application of one to the other, conclusion — in that order, and kept apart. Order matters because writing the conclusion first and then assembling support for it is the failure mode this format exists to prevent. Separation matters because a reviewer who disagrees with your conclusion should still be able to use your facts. Merge the two and disagreement with one becomes distrust of both.
The worked example is a memo on a fictional water loss where the engaged exclusion turns on a fact nobody can establish: how long the leak ran. It sets out both readings, says which evidence would settle it and why that evidence does not exist, and concludes that the question is open. That is the honest outcome and it is the one templates never show, because a memo that resolves cleanly is easier to write and teaches the wrong habit.
Jurisdiction
Written primarily against US first-party property practice. Claim handling is regulated state by state — acknowledgment and response deadlines, prompt-payment requirements, adjuster licensing and unfair claims practices standards all differ — and the policy actually issued governs the claim. Where a page cites a statute, model act or regulation, confirm what applies in the state where the loss occurred. Outside the US, treat the structure as transferable and the legal references as not.
Coverage Analysis Memo template
Free Word download, no email required. Or open it in Professional Drafter — it lands in your template library, ready to draft against.
When to use this document
- A provision is genuinely in issue and someone will have to write a reservation, a partial denial or a denial from your reasoning.
- The file is heading for a referral — to counsel, to a coverage unit, to a large-loss review — and the reasoning needs to be legible to someone who has not read the file.
- A position is going to be taken on facts that are partly unresolved, and the memo is where the unresolved part gets recorded as unresolved rather than smoothed over.
Worked example
Fictional scenario: an internal memo on a water loss where the exclusion in issue turns on the duration of the release, and duration cannot be established from anything in the file. The memo sets out both readings and concludes that the question is open rather than resolving it.
Memo header and distribution
- To:
- C. Mendez, examiner
- From:
- R. Calloway, field adjuster
- Date:
- 21 July 2026
RE: Claim no. PC-2026-11482; Policy no. HO-4471903, term 1 March 2026 to 1 March 2027; Insured D. Okonjo; Date of loss reported 14 July 2026; 118 Harbour Lane.
Distribution: examiner; recovery unit (facts found and open items only, as those bear on the referral of 20 July). No counsel instructed. Internal claim work product, handled per the file handling standard.
Question presented
Whether the seepage and leakage exclusion is engaged on a release whose maximum possible duration on the present evidence is approximately 61 hours, where the actual duration cannot be established; and what, if anything, could still establish it.
Short answer
The question cannot be resolved on the present file, and I do not expect it to become resolvable. The cause of the failure is established. Duration is not, and the exclusion is written in terms of a period of weeks, months or years.
On the evidence available the outer bound is roughly 61 hours, which is short of that language by a wide margin — but the 61-hour figure derives entirely from the insured's account of when he was last in the dwelling, and there is no independent record that corroborates it. My recommendation is a reservation on the exclusion, not a position, until the corroboration question is closed out.
Facts found
1. A braided stainless supply line serving the water heater separated at the crimped fitting at the heater end. Source: writer's inspection, 18 July 2026; components retained, tagged and photographed the same day (images 3-9).
2. The insured discovered standing water at approximately 07:15 on 14 July 2026. Source: insured, telephone, 14 July 2026, repeated in his account of 18 July.
3. The dwelling was last occupied at approximately 18:00 on Friday 11 July 2026. Source: insured, telephone, 15 July 2026. Not independently corroborated; see A below.
4. Moisture readings taken on the slab on 18 July 2026 with a Delmhorst BD-2100, wood scale, at 4, 8, 12 and 16 feet from the utility closet: 18.4%, 16.1%, 14.8%, 11.2%. Baseline in the far bedroom, approximately 40 feet from the closet: 9.6%. Source: writer.
5. Drywall wet to approximately 14 inches above slab along 31 linear feet of the south and west walls. Fourteen cartons of stored books water-stained. Garage and bedrooms unaffected; dwelling habitable throughout, no additional living expense claimed. Source: writer's inspection, 18 July 2026.
6. No corrosion, distortion or staining was observed on the heater jacket, and no efflorescence, mineral deposit or historic tide line was observed at or below the fitting. Source: writer's inspection, 18 July 2026. Relevant because those are the markers a long-running weep would ordinarily leave.
7. The water heater was replaced eleven months before the loss by Feldstrom Plumbing, invoice 20941 dated 3 August 2025. Source: copy provided by insured, 18 July 2026; line-item detail partly illegible.
8. Components referred to the recovery unit on 20 July 2026 with a recommendation that notice issue to Feldstrom before further examination, so that any inspection can be joint.
Facts not established, and why
A. The duration of the release. Steps taken: inspection of 18 July, including a specific search for historic staining at the fitting (fact 6); moisture gradient recorded (fact 4); insured asked about occupancy and about any record covering 11 to 14 July. What would resolve it: a water sub-meter (none at the property); a municipal consumption record isolating the period (supply is billed quarterly, next read due September, so the period cannot be isolated); a leak alarm or occupancy log (neither exists). Present status: undetermined, and likely to remain so.
B. Independent corroboration of the 11 July last-occupancy time. Steps taken: none beyond the insured's own account. What would resolve it: a smart-home or utility app history, a security system entry log, a neighbor or visitor who saw the property between 11 and 14 July, or a card or toll record placing the insured elsewhere. The insured has not been asked for these specifically and should be. Present status: undetermined, and resolvable.
C. Whether the fitting failed through installation error or product defect. Steps taken: visual examination only; components retained. What would resolve it: examination of the retained fitting, ideally jointly with the installer's insurer. Present status: undetermined. Bears on recovery rather than on coverage, and should not delay the coverage position.
Provisions engaged
Form HO-3, Section I - Exclusions. We do not insure for loss caused by constant or repeated seepage or leakage of water, or the presence or condensation of humidity, moisture or vapor, over a period of weeks, months or years, from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance.
Form HO-3, Section I - Perils Insured Against. The accidental discharge or overflow of water provision, including its carve-out that the peril does not include loss to the system or appliance from which the water escaped.
Form HO-3, Section I - Conditions, Your Duties After Loss, so far as it bears on the outstanding items at part 9.
Definitions relied on: none of the operative terms - constant, repeated, seepage, period of weeks - are defined terms in the form. That is the crux of the analysis below.
Application
The exclusion has three elements on its face: (i) constant or repeated seepage or leakage; (ii) from within a plumbing system or a household appliance; (iii) over a period of weeks, months or years.
Element (ii) is satisfied on fact 1. The release was from the supply line at its connection to the heater, which is within the plumbing system serving a household appliance on any reading.
Element (i) is arguable and largely collapses into element (iii). Nothing in facts 1 to 6 indicates an intermittent or repeated release as distinct from a single continuous one. A single continuous escape can be described as constant, so this element does not do independent work here.
Element (iii) cannot be assessed, and it is decisive. It is the element that carries the temporal requirement, and it is stated in units - weeks, months or years - that the evidence does not reach. On facts 2 and 3 the outer bound is approximately 61 hours, which is not a period of weeks on any reading. But that bound rests on fact 3, which is uncorroborated (unresolved item B). If fact 3 were displaced, the file has no independent means of bounding duration at all, because item A is not resolvable.
Fact 6 is worth weight in the other direction. The absence of mineral deposit, efflorescence or historic tide line at the fitting is the kind of negative observation a long-running weep would ordinarily contradict, and it was looked for specifically rather than merely not noticed. It is corroborative rather than determinative, and it should be recorded as an observation made deliberately, because a negative finding not recorded as deliberate reads later as a gap.
Facts 4 and 5 do not assist on duration. The gradient is consistent with a release of many hours and does not distinguish twelve from sixty. The depth of wicking, 14 inches above slab, is a function of drywall absorption and does not carry a clock.
The other reading
The strongest contrary position is that the fitting was weeping before it separated. Crimped connections commonly fail progressively rather than instantaneously; a slow weep behind a heater in a closed utility closet could run for weeks unobserved; and on that reading the separation on or about 11 to 14 July is the end of the process, not the whole of it. The exclusion would then be engaged even though the visible flooding was recent.
That reading would prevail if a historic weep could be shown - mineral deposit or staining at the fitting, corrosion at the strike point, staining on the closet floor at a level inconsistent with the recent event, or a metallurgical finding of progressive failure at the crimp.
What tells against it on the present file is fact 6: those markers were looked for on 18 July and none were observed. What I cannot say is that they were excluded to a standard that would survive challenge, because the examination was visual and made in situ before the components were removed. If the exclusion is going to be relied on, this is the reading that has to be closed out, and closing it out means examining the retained fitting rather than looking at the photographs again.
Conclusion and recommendation
Conclusion. The exclusion is not established on the present file, and neither is its inapplicability. Element (iii) turns on a fact that is undetermined and, on item A, probably undeterminable. The available evidence points away from a period of weeks, but it rests on an uncorroborated account of last occupancy.
Recommendation.
1. Issue a reservation of rights on the seepage and leakage provision and on Your Duties After Loss, tied to the specific facts and to unresolved items A and B. Do not reserve on any other exclusion; nothing in the file engages one.
2. Do not state a position on duration in any correspondence. The 61-hour figure is an outer bound derived from the insured's account and should be described as such wherever it appears, not carried forward as a finding.
3. Pay the undisputed portion under a partial denial that declines the heater and supply line on the carve-out and reserves the duration question. Estimate revision 2 totals $18,340 replacement cost and $17,890 actual cash value on the dwelling, and the two lines to be declined ($1,900 replacement cost) sit inside that total, so the letter has to take them out of the payment arithmetic rather than declining them alongside a payment of the full estimate. Contents pricing is outstanding.
4. Ask the insured specifically for the item B records - app history, security log, any third party who saw the property between 11 and 14 July. This is the only unresolved item that is realistically resolvable, and it is cheap.
5. If the examiner takes the view that the exclusion should be relied on, the retained fitting needs examination before that position is taken, and I would want written authorization for the instruction. My own view is that the expenditure is not justified on an exposure of roughly $17,300 before deductible, but that is a judgment on cost, not on the coverage question.
Reserve implication. None arising from this memo. Indemnity remains at $19,000 and expense at $2,500, which accommodate the analysis above. If recommendation 5 is adopted, expense will need revisiting for the consultant's fee.
Open items, owners and dates
1. Contents inventory pricing - insured - requested 18 July, reminder 21 July - target 5 August 2026.
2. Legible copy of Feldstrom invoice 20941 - insured - requested 18 July - target 5 August 2026.
3. Item B corroboration records - writer to request from insured - to be requested with the reservation letter, 22 July - target 5 August 2026.
4. Examiner's direction on recommendation 5 - examiner - requested by this memo - target 29 July 2026.
5. Recovery unit to give notice to Feldstrom before any further examination of the retained components - recovery unit - referred 20 July - no target set by this file.
6. Next status letter to the insured - writer - due 5 September 2026 at the latest, per the interval applying in this state.
Section-by-section guide
What each section is for, what a good one contains, and where they typically go wrong.
1.Memo header and distribution
To, from, date, claim and policy identifiers, and the distribution list. Then the handling legend your organization uses for internal work product, applied according to its own rules rather than added decoratively — a legend on every document is a legend that means nothing. If counsel has been instructed, say so here, because it changes who else should be receiving it.
2.Question presented
One or two sentences, phrased as a question, specific enough that the answer could be yes or no rather than it depends. Is this loss covered is not a question, it is a topic. Whether the seepage and leakage exclusion applies where the release lasted at most 61 hours is a question. If you cannot phrase it tightly, the analysis below will not be tight either.
3.Short answer
Two or three sentences giving the answer and the reason, before the working. It goes here rather than at the end because the reader is an examiner with forty files, and burying the conclusion means it gets missed. If the answer is that the question cannot be resolved, say that in the same place with the same directness, and name what would resolve it.
4.Facts found
Numbered, dated, and each attributed to its source — your inspection, the insured's statement of a given date, a named report, a document. Facts only, no characterization. This is the section the memo is actually for, because everything downstream is checkable against it, and it is also what makes the file reconstructable: Model 910 §6 describes a claim file as one maintained so as to show clearly the inception, handling and disposition of each claim, and sufficiently clear and specific that pertinent events and their dates can be reconstructed.
5.Facts not established, and why
Its own section, never a footnote. What is unresolved, what was done to resolve it, what would resolve it, and who holds that. The reason this earns a heading is that undetermined facts are the ones that migrate into findings when nobody wrote them down as undetermined. Give each one the same numbering treatment as the found facts so it can be referred to by number in the application.
6.Provisions engaged
Form number, endorsement number, section, and the text quoted verbatim. Include the definitions the provision depends on, because most exclusions are argued at the definitions rather than at the operative words. Quote from the form in front of you: ISO forms are proprietary and cannot be reproduced in a published guide, which is why the public reference point for what a standard condition looks like is the standard fire policy that several states enact verbatim into statute. Quote only what the facts actually engage. A memo that quotes six provisions to discuss two is a memo somebody assembled rather than wrote.
7.Application
Fact by fact against provision, referring to the numbered items above rather than restating them. Where the provision has elements, take them in order and say which are satisfied, which are not, and which cannot be assessed. This is the section that gets skipped by writers who already know the answer, and it is the only part a reviewer can actually test.
8.The other reading
State the best version of the position you are not taking, and say what would make it prevail. It is the section a reviewer looks for first when deciding whether to trust the memo, and it is also the cheapest way to find out that your own reading has a problem. Write it as an advocate would, not as a straw man.
9.Conclusion and recommendation
What follows for the handling of the file, in the next-step form: what letter should go out, what should be reserved, what should not be said yet. Distinguish the analytical conclusion from the operational recommendation. If your conclusion is that the question is open, the recommendation is usually a reservation and a specific investigative step, not a decision.
10.Open items, owners and dates
A table in prose: item, who owns it, date requested, target date. Every open item in the analysis above should appear here with a name against it. An analysis that identifies four unresolved questions and assigns none of them is a memo that will be re-written by whoever picks the file up next.
Common mistakes
The failure modes that show up most often when this document is reviewed later.
Writing the conclusion first and assembling the facts that support it.
It produces a memo that reads well and cannot be tested. The tell is a facts section containing only facts that point one way, which is also the section a reviewer notices first when the position later comes under pressure.
Putting unresolved facts in a footnote or in the narrative rather than in their own section.
Unresolved facts that are not labeled as unresolved become findings within two documents. Give them a heading and their own numbering so that the application section has to refer to them by name.
Paraphrasing the provision in the memo and quoting it only in the letter.
The analysis is then performed against your summary rather than against the form. Most exclusion arguments turn on a qualifier, and the qualifier is exactly what a paraphrase drops.
Omitting the contrary reading because it is weak.
A reviewer who can think of it and does not find it in the memo assumes you did not think of it. Writing it out at its strongest is also how you find out whether it is actually weak — sometimes it is not.
Recording a negative observation without recording that you looked for it.
No historic staining was observed and I examined the fitting for historic staining and observed none are different statements with different evidential weight, and only the second survives someone asking whether anyone checked.
Recommending a position when the analysis concludes the question is open.
The memo then contradicts itself and the examiner has to choose which half to act on. If the question is open, the recommendation is a reservation plus a named investigative step with an owner and a date.
Questions
- Is a coverage memo discoverable?
- That is a question for counsel in your jurisdiction, and the answer varies with who wrote it, at whose direction, and for what purpose. Two things are true regardless: write it as though it will be read by someone who disagrees with it, and do not apply a privilege legend as a formatting habit. A legend applied to every internal document is a legend that has no meaning when it matters.
- Why keep the memo separate from the position letter?
- Because the memo can say the question is undetermined and set out both readings, and a letter written to the insured cannot do that without either overstating or conceding. Writing the analysis first also means the letter becomes an extract of reasoning that has already been tested, rather than the place where the reasoning is invented.
- How much of this belongs in the claim file?
- The reasoning and the dated facts, at minimum. Model 910 §6 describes a claim file as one maintained so as to show clearly the inception, handling and disposition of each claim, and sufficiently clear and specific that pertinent events and their dates can be reconstructed — retained for the year the claim closed plus three years. A memo built on numbered, dated, attributed facts satisfies that description almost by construction; a narrative one does not.
- What if the analysis cannot reach an answer?
- Then that is the answer, and it is a legitimate one. Say what is undetermined, what was done about it, what would resolve it and who holds that, and recommend the handling that fits an open question — usually a reservation and a specific next step. The worked example above ends that way on purpose. Files that resolve every question cleanly are rare enough that examples built around them teach a habit the work will not support.
The blank template
Exactly what is in the Word download, so you can see the structure before deciding whether you want it.
Memo header and distribution
Question presented
Short answer
Facts found
Facts not established, and why
Provisions engaged
Application
The other reading
Conclusion and recommendation
Open items, owners and dates
Download this template
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Sources
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This page is a documentation aid, not legal advice and not a coverage opinion. Claim-handling requirements vary by state and by policy wording, and a template cannot tell you what your file requires. The worked example describes a fictional loss.