The Settlement Release: Or - A Lesson in Reading Carefully

Whether or not you retained your own personal injury attorney after a motor vehicle collision, the process generally takes the same steps.

• First – You are involved impacted by a vehicle driven by a person glued to their phone instead of paying attention to the roadway.
• Second – You initiate a claim against the at-fault driver’s insurance company.
• Third – You get medical treatment until you’re feeling better.
• Fourth – You negotiate a settlement with the insurance company.

There’s a hidden fifth step that most people are not aware of, though, and it takes the form of the dreaded settlement release agreement. After reaching a verbal (or even a written email) agreement with the liability insurance adjuster, they won’t just send you a check in the mail. They will usually require that you sign a contract barring you from making any future claims against their insured related to the incident in question. Generally speaking, there’s nothing wrong with the use of these types of agreements. The problem lies in how the insurance companies insert sneaky language or don’t provide enough context before providing these agreements to injured parties.

The first step any injured party should take after receiving a written release in the mail is to review it carefully. Ignorance of the law is no defense to the law, which means that if you sign the agreement without reading it first, you are usually stuck with the consequences of the contract.

Moreover, be very careful that the document you review describes the agreement that was made. Many times, insurance adjusters will add in additional language that wasn’t part of the original oral agreement that they’re hoping you won’t catch. For example, be wary about settling property damage claims specifically. Often, the insurance adjuster will try to settle your personal injury and medical expense claim at the same time without providing you and forewarning.

This same logic applies to receiving a random check in the mail. Sometimes, insurance companies won’t send you a formal written release. Instead, they will send you a check for a relatively significant amount of money with the words “for full settlement of all claims” (or something like that) in the memo line. Without providing you any context for why the check was sent, the adjuster is hoping you will cash the check. They will then argue that you are not entitled to make any future claims. Overcoming these obstacles is certainly possible, but it is much easier to avoid them in the first place.

There are some basics for the settlement release that all parties should understand before entering into a contract. First, the terms of the agreement should be explicit. For example, usually at the top of the contract, it should describe that Insurance Company will be paying Injured Party a specific amount of money (or whatever else was agreed upon). In exchange for that money, the Insurance Company will set several conditions.

• Release – A clause preventing the Injured Party from taking any future action against the at-fault driver or Insurance Company related to a specific event. In other words, once you settle this claim, there’s no going back.
• Indemnification and Hold Harmless – A promise made by the Injured Party to cover the Insurance Company and the at-fault driver if the Injured Party rebukes the terms of the contract.
• No Admission of Fault – Don’t get too hung up on the Insurance Company denying liability in the agreement in most instances. While it’s frustrating to see this denial in writing, it has no bearing on the settlement money.
• Payment – Ensure that payment must be made in a certain timeframe. This will prevent the Insurance Company from delaying payment for months.

Release and settlement agreements are binding legal contracts. When settling your own insurance claim, be very sure to understand and ask questions where necessary. If you’re working with an attorney, make sure they explain the consequences of the agreement in detail. If you are injured in a motor vehicle accident, the law offices of Magnuson Lowell PS can help you negotiate with the insurance company and deal with the legal jargon. Call today for a free consultation.

Share this post!