After negotiating with the insurance company regarding your personal injury case, you may finally reach an amount that you feel adequately compensates you for your injuries and damages. While you can agree to a settlement of your case orally, it is common practice for the insurance company to insist that you affirm the settlement in writing.
This often requires you to sign a “settlement and release agreement” (S&R agreement). The S&R agreement essentially memorializes the settlement amount and defines certain important terms related to the settlement and release of the claims related to your accident. It is important to understand that signing and executing an S&R agreement will result in a final settlement. This means that you cannot reopen the claim or re-litigate the issues should you be dissatisfied later. Therefore, you should read and understand these documents very carefully before signing.
Typically, your S&R agreement will arrive shortly after agreeing to a settlement amount with the insurance company. The insurance adjuster will usually send the S&R by email or regular first-class mail. It is worth noting that certain insurance companies require the settlement and release to be reviewed and signed before they issue a settlement payment. As such, if your settlement agreement states that you have already been paid, be sure to contact the insurance adjuster and advise them that the release language requires that you be paid before signing the S&R agreement.
If you settled your claim orally and have not received the S&R agreement after seven business days, consider calling or emailing the adjuster and politely inquiring as to the status of the S&R agreement.
Although you may have reached a settlement figure with the insurance adjuster orally, it is in your best interest to send the adjuster a letter or email that expresses your understanding of the terms of the agreement.
If, for example, the insurance adjuster agreed to pay you $5,000 for pain and suffering, $1,000 for lost wages and $5,000 for your out-of-pocket medical expenses, you may want to include those details in the letter. If your accounting of items of damages differs from the insurance adjuster’s, you may be able to show that there was never a “meeting of the minds,” and cancel the agreement or put it on hold until you are able to discuss these matters with the adjuster. For more information and a sample letter acknowleding settlement, please visit our Settlement Document section
The other major item on your to-do list before signing the S&R agreement is determining your outstanding balances and lien obligations. Contacting your medical providers and lienholders may be a frustrating process, but it is extremely important. Understanding how liens are assessed against your settlement is often the difference between a modest recovery and netting the true value of the settlement you negotiated. For more information about liens and subrogation, visit our liens and subrogation article.
It is important to know which liens are required to be paid out of the settlement versus those that can be negotiated. Liens must be paid to the lienholders within a reasonable amount of time after receiving your settlement check. These liens often include Medicare and Medicaid, as well as private health insurance liens.
Do not allow the insurance company to resolve any outstanding balances or liens for you, as they will simply pay the medical providers directly from your settlement money without contacting them to negotiate a more equitable payoff amount for you. However, these outstanding balances must be resolved, as they will likely impact your credit score if they are ignored or even result you a lawsuit. For click see our article on lines and lien negotiation.
As previously stated, it is very important to read the S&R agreement carefully before signing. If the settlement and release agreement contains errors, you should first notify the insurance adjuster regarding the mistake(s). If the insurance adjuster refuses to correct the errors, you can and should refuse to sign the agreement.
There are material errors, such as specifying the wrong dollar amount for your settlement, and non-material errors or misnomers, like spelling your name incorrectly. Both categories of errors will be binding upon signing the agreement, so it is important that the terms of the release are accurate before signing.
A sample letter requesting that corrections be made can be found at this link on our website: [INSERT LINK]
Yes. You will most likely have to sign the S&R agreement before the insurance company will agree to issue a settlement check. This can be frustrating because the insurance company is only required to send the settlement check within a “reasonable time” from the date that the completed S&R agreement was received, which allows them to delay issuance of the settlement check.
However, if the insurance company is located near you and you are still concerned about signing the S&R agreement before receiving the settlement check, you can ask the insurance adjuster to meet you in a public location to exchange the executed S&R agreement for the settlement check.
If you refuse to sign the S&R agreement, the insurance company will not agree to a settlement of your case. The reason is that the insurance company wants to ensure that neither you, nor someone else on your behalf, will be coming after their insured and/or the insurance company for more money after the case has been resolved.
Every S&R agreement contains certain language that must be included, such as the settlement amount, but the terms of the agreement can often vary from one insurance company to another. Some of these differences are fairly innocuous, while others can drastically affect your rights and possibly even the rights of others.
“Hold harmless” provisions often appear in S&R agreements. These provisions are intended to insulate the insurance company and the at-fault party from lawsuits by other parties that might have subrogation claims for services rendered to you by making you responsible for settling those claims. As we have already discussed, it is your responsibility to handle statutory liens and outstanding balances with medical providers, so “hold harmless” language that includes subrogation for liens, or something to that effect, is not problematic. However, insurance companies frequently treat these provisions as more of a catch-all clause that can be construed very broadly if necessary. This could result in you having to pay to defend the insurance company against a claimant over an unrelated issue. Therefore, you should look for clauses that require you to defend and hold harmless against “any and all other parties” who might have claims.
You should also be alerted to the insurance company’s attempts to have your spouse or someone else sign the S&R agreement with you. You must have someone sign as a witness to your signature, and this is proper procedure. However, you should be the only claimant/releasor listed on the S&R agreement. If the insurance company includes your spouse or another entity on the release as a claimant and asks them to sign, they are impermissibly roping other parties into your claim to limit their liability, and this could affect both your rights and the rights of others. If the other party listed as a claimant on the agreement signs, it will result in the settlement check being issued to both you and the other party. Clearly, this can create a mess for you because then you will not be able to deposit the check without that person’s consent. The other issue is that this person may indeed have claims that he or she is losing by signing the agreement as a claimant. If another person has a valid claim against the insurance company that relates in some way to your claim, that person should be executing their own release.
We have included a sample settlement and release agreement on our website for comparison. It can be found at this link: [INSERT LINK]
Once you sign the S&R agreement, your rights in your case are effectively terminated. You are surrendering any claims that you may have in the case, so you will not be able to pursue a lawsuit once the release is sent back to the insurance company. However, an S&R agreement is only effective against the parties who are listed.
Once the agreement is signed, you will not be able to reopen the case or pursue future losses resulting from the accident. This is why it is so important to make sure that you have been fairly compensated for both your present condition and any expected future losses that you may have before signing the agreement.