If you've been involved in a car accident and it's pretty clear the other driver was at fault, don't be surprised if their car insurance company tries to get you to accept an early settlement. It may be tempting to get some quick money, but keep in mind:
You've been injured in a car accident, and all signs point to the other driver being at fault, so you file a claim with their insurance company. (This is known as a third party car insurance claim.)
A week or so later, you receive a settlement offer from the insurance adjuster, which is a bit surprising, since you're still attending medical appointments in connection with your car accident injuries. Still, the offer is $5,000, and you're tempted to take the money, even though you're pretty sure your medical bills alone might reach that amount pretty soon. At least you can avoid the time and expense of filing a car accident lawsuit and getting a lawyer involved.
The insurance company has made clear that accepting the settlement offer and receiving your check hinge on signing a form called a "Release of Liability." This form is so named because it "releases" the responsible party—the at-fault driver and their insurer—from any liability associated with the accident.
In other words, once you sign the release, you can't ask for more money, file a lawsuit, or take any further action (or get any additional compensation from) the at-fault driver or their insurance company in connection with the accident.
There are no shortage of reasons why it's crucial to think twice (or more) before signing any kind of release related to your car accident claim, including:
Let's take a closer look at a few of these reasons for caution before signing any release presented to you after a car accident.
The most obvious concern is whether the car accident settlement will actually cover all of your damages associated with the accident. It may not take long to determine how much it will cost for repairs to your vehicle, but other damages can be more difficult to calculate. For instance:
An insurance company may try to settle quickly, before you have a chance to fully comprehend the scope of these damages.
Those recurrent headaches may seem minor, but they may be an indicator of more significant neurological damage than you or your doctor originally suspected. If you signed a release before your condition was fully understood, you could be stuck with mounting medical bills and lost wages as you have to seek additional treatment.
At the bare minimum, a good rule of thumb is this: Don't sign any kind of release until your doctor has informed you that your course of medical treatment is complete, or you've reached "maximum medical improvement" (MMI).
This is only a consideration in situations where more than one driver or some other party (like the driver's employer or a business) might bear some amount of responsibility for the accident.
When one at-fault driver's insurance company asks you to sign a release in exchange for your settlement check, the release you're asked to sign should only apply to your rights against this specific driver and their insurance company.
In other words, make sure that the fine print of the release still gives you the freedom to pursue action against anyone else who might bear some amount of fault for the crash.
Learn more about fault for a car accident.
It may not seem obvious at first, but signing this release could get you in trouble with your own insurer. This concern is best understood as a hypothetical. Let's say that your vehicle was hit by a driver who is 100% at fault, and you suffer $20,000 in losses between medical bills and vehicle damage. The other driver has a state minimum coverage policy worth only $12,500, and his insurer is ready and willing to settle for that amount.
You may think this sounds like a fair deal, since it's all you can get out of the insurer, and what are the odds you can really collect much money from the driver directly? Besides, your own insurance policy probably includes uninsured/underinsured motorist (UIM) coverage, so your insurer should cover the difference.
Without going into too much depth on the doctrine of subrogation, your insurer can pay out UIM benefits, and then pursue a remedy against the other driver. But by signing the release, you have waived your rights—and by extension, those of your insurer—against the other driver. Because this leaves your insurer holding the bag, most insurance policies (and some state laws) require that you get your insurer's permission before signing off on a release.
If you sign a release without permission in such a situation, the insurer may not be required to pay out UIM coverage, leaving you with no relief for the difference.
If you don't understand some of the language in the release, or if the ramifications of that wording aren't clear, you can ask the insurance adjuster for explanation and clarification. But you probably shouldn't take the insurance company's word as gospel when it comes to your rights and options, which brings us to our next question.
Consulting an experienced lawyer is never a bad idea when you're presented with a settlement offer and release in a car accident case. An attorney can help evaluate the settlement offer based on the specifics of the situation and help determine whether your rights (present and future) would be adequately protected should you accept the deal and sign the release.
Ultimately, whether signing a release is a good idea will depend on the circumstances of your case. If there is minimal vehicle damage and injury—and all your damages are understood and accounted for—and the settlement amount exceeds those damages with a little extra thrown in, then taking the settlement and signing the release may be the right thing to do.
There are also scenarios in which your own insurer will ask you to sign a release before authorizing payment for vehicle repairs. Most of the concerns we've discussed above don't apply in these situations, so signing the release is more of a formality.
By now you're hopefully convinced that serious caution is required any time you're presented with a settlement offer and asked to sign a release after a car accident. And while refusing to sign the release is often the right strategy, especially early on in the claim process, what comes next?
The short answer might be: nothing, for the time being. You're perfectly free to tell the insurance adjuster that you're not going to sign a release or consider a settlement until you understand the full value of your claim, and you're certain it's the right move.
When the time comes—when all your medical treatment is done, and you've fully recovered—you can assess things, gather your records and other evidence, and put together a demand letter in which you:
Check out these sample demand letters to get an idea of what this kind of correspondence looks like:
Of course, whether in the first days after a car accident, or after you've received a too-early/too-low settlement offer, it's never a bad idea to discuss your situation with a car accident lawyer.
Turning your claim over to an experienced legal professional means putting it in the hands of someone who:
Learn more about how an attorney can help with your car accident claim. You can also use the features on this page to connect with an injury lawyer in your area.