Do You Know What You’re Signing in an Insurance Settlement?

photo of 2 cars collided in a multi car accident

When it comes to an auto accident, many people rely on an insurance settlement to help them shoulder the burden of damages. This is especially true when the other driver does not have enough insurance to cover the damages caused in an accident. However, this reliance also comes with a false sense of security that insurers sometimes take advantage of. In a case out of California’s federal district court, that may be exactly what happened.

Why You Should Be Cautious About Signing an Insurance Settlement

On October 5, 2010, a man driving a company vehicle was struck by another driver. That other driver did not have sufficient insurance to handle the damage or medical treatments that resulted from the crash. That meant the man had to rely on his employer’s insurance to pay for his medical bills.

The employer’s insurance had underinsured motorist (UIM) coverage. However, collecting on that policy wasn’t going to be easy. The man and his employer’s insurance company eventually had to go to arbitration—an out-of-court proceeding to settle legal disputes. The two sides reached a settlement for $699,999 and the employee signed the settlement release.

Five months later, the man filed a lawsuit against the insurance company as it became clear that earlier actions by that insurer had broken the covenant of good faith. He claimed that the insurer had delayed the processing, investigation and evaluation of his claim, refusing to release policy benefits in a timely manner. These actions allegedly breached the contract the insurer had with the employer, so the man filed a lawsuit in California federal district court.

In response to this filing, the insurer petitioned the court to dismiss the lawsuit. To support this motion, the insurer produced the settlement release signed by the man during arbitration. The settlement contained language that released the insurer from, “any and all claims, actions o[r] causes of action known or unknown…” connected to the accident that happened on October 5, 2010. The court dismissed the man’s lawsuit.

This case serves as a warning to others who place too much trust in an insurance company. Insurers do not always act in the best interests of their policyholders. They can delay payment, force you into legal disputes or offer you an unfair “lowball” settlement. Signing any settlement document without experienced legal counsel can keep you from being fairly compensated, even if that insurer has wronged you. This is why you should consider speaking to an attorney when you file an insurance claim.

To learn more about protecting yourself from DUI drivers, keep following the attorneys at the Traffic Accident Law Center. We’re here to help crash victims work through the complex issues of their case.