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Should I Sign an Insurance Release?

An insurance release is an agreement that you can sign after you are involved in an accident that waives your right to file a personal injury claim against another party involved in the accident. These releases are often offered by the negligent party’s insurance provider as an attempt to settle a claim quickly. By signing an agreement, you are agreeing to take the money you are offered and not pursue a claim against the insured party any further. This scenario commonly occurs after car accidents.

If you are offered the opportunity to sign an insurance release, you might wonder if signing it is in your best interest. An insurance release is so named because it releases the negligent party from any further liability for your damages. Basically, you receive a settlement amount from the insurance provider and the case is closed. Whether you should sign an insurance release after an accident depends on a few factors. Always discuss the offer you receive with your attorney to determine whether it is a fair offer before replying to the insurance provider – you could potentially receive much more than you are initially offered with some negotiation.

Ask Your Attorney the Following Questions

When discussing an insurance release offer with your attorney, determine the answers to the following two questions:

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  • Will all of my needs be covered by the settlement amount?
  • Do I need permission from my automobile insurance provider to sign such a release?

The first question is for your own benefit. In many cases, insurance providers initially offer claimants much lower settlement amounts than they actually need to cover their expenses, such as medical bills, lost wages, and pain and suffering. If you have not yet completed your medical treatment or are not sure of how long you will be out of work, do not sign an insurance release. The amount of money you are offered could be inadequate and leave you paying for the bulk of your expenses from your own pocket.

The second question has to do with your insurance provider’s right to subrogation. Subrogation is the practice of filing an insurance claim on behalf of another party. A scenario where your insurance provider might want to exercise this right is if it needs to cover some of your expenses through your uninsured/underinsured motorist (UIM) coverage. This could happen if you are involved in an accident and your expenses exceed the amount of coverage the negligent party is liable to cover. By signing an insurance release to waive your right to file a claim with the negligent party’s insurance provider, you are also waiving your own provider’s right to file a claim with the other provider to recover the money it paid to you. Some insurance providers prohibit this and may disqualify policyholders from receiving compensation through UIM for signing insurance releases without the provider’s permission.

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