Signing a Release When Settling an Auto Insurance Claim: Are You Out of Options?

Many insurance companies will not make a payment on a claim without requiring a release to be signed. Their intent is to close the claim fully and with finality. Here are some tips on what to do and consider, if you feel you signed the release too soon.

If you had a claim for property damages or injuries and arrived at a settlement agreement with the insurance company, they may have asked you to sign a release. Insurance companies often will require this in their attempt to fully extinguish the claim. There are two reasons for this: first to fully protect their insured from being sued by you, and second, to limit their own exposure to the loss and “put the matter to rest”.

If you’ve signed the release but now you find that you were not adequately compensated, is there anything you can do?

There may be.

Getting an insurance company to “open up” a claim that has been settled with a release can be difficult. The intent of the release was to fully settle the matter. Their primary obligation is to protect the person they insure. If they agree to open up the settlement, this may not be in their insured’s interest. It is likely that the release will also have language to specifically address situations where additional, unknown damages arise, stipulating that the release is intended to settle for all damages, known and unknown.

On the other hand, insurance companies know that they are considered to be at an advantage in settlement negotiations with legally unrepresented parties. If there is evidence that the settlement was not fair, misrepresented or undue pressure was put on you to sign, then they may be very willing to renegotiate the settlement and draw up a new release.

There are some things to consider which may work in your favor in attempting to get the insurance company to set aside and renegotiate the settlement.

The first thing to understand is that the release is a contract between the insurance company and the injured party. Whether or not the contract is a valid one, is a legal question to ultimately be decided by the courts based on the evidence and facts known. You will want to understand what this evidence is, as this is what the insurance company will want to know. Here are some things to consider:

• Were you fully aware of what you were signing at the time of the release? You’ll want to evaluate if you understood fully what you were signing, if you had the opportunity to review the release before signing it. Look at the time of the loss, and how soon the offer to settle was made. Did everything happen very quickly and you have the distinct feeling of being rushed? Was it obvious at the time that the damages could not have been fully understood?

• How does the amount of the release payment match up with the damages claimed? If it was clear at the time of the settlement that the injuries, damages and costs were or were likely to be substantially more than the amount of the settlement, that could be evidence that the release and it’s terms were at least not clear or even perhaps misrepresented, at the time of the settlement negotiation.

• What were the events leading up to, and during, the settlement negotiation? Review what was said including promises and representations made. Was there pressure applied by the adjuster to sign immediately? Did you sign in the presence of the adjuster? Was it communicated that you would not be able to collect anything more in the future if you did not sign immediately? You will want to review the evidence that the negotiation was entered into fairly, that you were made fully aware of the implications of the release, without undue pressure or misrepresentations.

• How savvy are you in regards to the claims and legal process? It is much less likely that you would be able to establish that you were pressured, or unclear about what you were signing if you are an attorney or already work for an insurance company, for example. Did you seek any advice before signing the release? Were you alone or did you have anyone present at the time you signed the release? Essentially, you need to evaluate what were the circumstances that an impartial person would consider when evaluating whether or not you were taken advantage of unfairly.

After reviewing the evidence you have, your next step would be to contact the insurance company and discuss your case. If you can establish that there is good evidence that the release agreement has problems, the insurer may very well agree to consider additional compensation and a new settlement agreement.

If you feel the settlement was unfair and if the insurer is not responsive, you can consider having the matter reviewed by your state’s department of insurance. They may intervene on your behalf to make sure the matter is reviewed and that you get a response in writing from the insurer.

You can also always consult with an attorney. She or he will be able to evaluate your case and may even take it on depending on how compelling the evidence is and the amount of additional damages owed.