The Release of Liability After a Car Accident Claim

A look at how releases work, and their legal effect.

After you settle a car accident claim or lawsuit, you will have to sign a release of liability form, generally called simply a "release." The release is the document that sets out the terms of the settlement. If you have not filed a lawsuit, the release prevents you from filing a lawsuit. If you have filed a lawsuit, the release ends the lawsuit. Read on to learn more about how releases work in a car accident case.

Who Prepares the Release?

If you settle your claim without a lawyer, the insurance adjuster will send you the release to sign. If you have a lawyer, but the case is not in suit, many adjusters are content to allow your lawyer to prepare the release. If the case is settled after the lawsuit has been filed, the defense attorney will always prepare the release.

The Customary Terms of a Release

In most car accident cases, a release is a relatively simple document, but, in some cases that are in suit, the defense attorney will insist on preparing a ten or fifteen page document dense with legalese. Releases generally contain the following language:

  • an identification of all of the parties to the claim and to the settlement: i.e., the injured person and/or plaintiff, the defendant(s) (usually the owner and/or operator of the car that hit you), and the defendant’s insurance company
  • a statement that you claim to have been injured on a specific date, listing the date
  • the amount of the settlement
  • if, as part of the settlement, the insurer is paying some of your medical bills or other liens or debts, the release will specifically identify who the insurer is paying on your behalf
  • a statement that, as a condition of the settlement, you release the defendant(s) and involved insurance companies from all liability for damages relating to the above referenced injury
  • a statement that the defendants deny any liability for the accident.

You have probably read about lawsuits that were settled for millions of dollars, but the defendants denied that they were negligent, and wondered how can the defendants pay all that money and still deny liability. That is just the way that personal injury cases are settled. Insurers want the release to extinguish all possibilities of future liability, and so insist that the insured not admit liability. There are very few personal injury settlements in which the defendant admits that he/she/it was negligent.

Releases may be long or short, or clear or totally incomprehensible due to legalese, but their main point is always the same – you agree to drop your claim or lawsuit, and the insurer will pay you some money.

Confidentiality Clauses in Releases

Some defense attorneys and insurers like to put confidentiality clauses in releases. A confidentiality clause is just what it sounds like -- you can’t tell anyone about the terms of your settlement, except perhaps a lawyer or financial advisor.

As a general rule, an insurer cannot insist on a confidentiality clause in a release unless it specifically negotiates that clause with you and your lawyer before you agree to the settlement. If the insurer or the defendant wants confidentiality, they should have to pay for it.

What Happens If We Don’t Agree on Terms?

Depending on what the release says, a release can be very straightforward, or it can be objectionable. If you have a lawyer, he/she will read it carefully to determine whether it is acceptable. Sometimes, the lawyers will argue for days over the terms of the release. They generally reach an agreement, but, if they don’t, they will request that the judge decide. That will slow down the settlement considerably, and so disagreements that involve a judge are rare.

Once the release is acceptable, your lawyer will send it to you to sign. You will usually have to sign it in front of a notary public, sometimes in triplicate. Before signing it, you will want to read it carefully and discuss it fully with your lawyer, asking all of the questions that you need to ask. Once the release has been signed and returned to the defense attorney, there is no chance of changing of the terms.

Releases are Final!

A very important rule about settlements and releases is that, once your lawyer tells the defense attorney that you accepted the settlement offer, the case is settled. In almost every state, this is final. If you change your mind about settlement five minutes after your lawyer tells the defense attorney that you accepted the settlement offer, you have almost zero chance of getting the court to reverse the settlement. And once you sign a release and send it to the insurance company or defense attorney, the settlement is even more final. If you don’t want to settle your case, don’t tell the insurance company -- or don’t let your lawyer tell the insurance or defense attorney -- that you accept the settlement offer.

Get more words of caution and tips Before You Sign a Car Accident Release.

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