If the injury case is settled between the victim and a single liability insurance carrier, the only document involved is a general release. Most injury claim releases are standard form releases. In the release, the defense does not acknowledge legal liability or fault. This is typical and safe language. Further, a proper release simply identifies the settlement amount and indicates that it is “a settlement of a claim of disputed amount and disputed legal liability.” This language is safe and beneficial. If you reach a settlement without counsel, an attorney in the personal injury arena should be willing to review a release for you for a very small charge (if not free of charge entirely). Remember that a release closes your case and ends all potential future claims. Make sure that your health is recovered and that all expenses and losses are being honored before you sign away your rights.
If your settlement involves multiple at-fault parties or multiple insurance policies, there will be more than one release. If the claim is made against multiple liability insurance policies with no involvement of any underinsured motorist (UIM) coverage, then the case settlement would involve a single settlement with all liability payments being tendered simultaneously. You should not settle with one liable party or seek to separate your claims. Make sure all liable parties are at the table, and make sure the total payment is acceptable before reaching any verbal or written agreement. One release should be signed that identifies all parties involved in the settlement. If each liability insurer requests their own release, this is acceptable practice and all releases should be executed simultaneously.
If the settlement involves payment from Uninsured Motorist (UM) coverage, you must be certain that all available UM policies are involved in the settlement. Stacking of UM coverage allows an injury victim to collect from multiple UM sources. Since the individual policies and insurers have shared, proportionate liability, you must involve all carriers and adjusters in the settlement. Typically, each carrier will ask that their own release be signed. In a UM case, the release is unique and does not release the at-fault driver and other liable parties. Rather, it releases the insurance carrier from further obligations under the policy that provides UM coverage. In addition, the UM carrier will typically ask the claimant to sign a subrogation agreement containing the claimant’s agreement to cooperate if the UM insurance carrier decides to pursue the uninsured driver for reimbursement.
If the claim involves payment from liability insurance and also from UIM, the settlement may be reached in two stages. The first stage is the liability settlement. Here, the claimant must confirm with certainty that all liable parties are identified and that all liability insurance policies are involved in settlement talks. If all liability coverage is offered, the victim must then secure written confirmation from the liability insurance carriers that the total amount of available liability coverage is being offered, tendered, and exhausted. This “written liability tender” is provided to the UIM insurers (all stackable policies must be involved at this stage), and they have thirty days from receipt of the liability tender notice to determine whether they wish to subrogate against any at-fault parties. Here, the UIM insurance carriers are looking at the wealth and assets of all responsible parties to determine whether they want to file suit after settlement with the victim to seek reimbursement of any amount they pay in UIM benefits. Before the end of the thirty-day period, the UIM insurer must pay the amount of the liability tender offer to the claimant if they wish to preserve their right to seek reimbursement from any at-fault parties. This payment is called a UIM advance, and the effect is to pay over the liability coverage amount to the victim while, at the same time, preventing the victim from signing any type of release or covenant in favor of the at-fault parties.
In most UIM cases, the UIM insurer will not pay the UIM advance and they will not preserve their rights to subrogation and reimbursement. In these cases, the settlement is reached in two stages. In the first stage, the victim settles with the liability insurance carrier by signing a covenant not to enforce judgment (hereinafter referred to as a “covenant”). The covenant contains the victim’s promise that he or she will not seek any money or assets from the at-fault party. The legal effect is to preserve the victim’s rights to payment under all available UIM policies and to allow the victim to bring the case through trial if necessary to determine case value and to force payment from UIM carriers. However, the covenant also provides that if the trial verdict exceeds the amount of available UIM coverage, the victim cannot collect any amount directly from the at-fault parties or seek payment of any amount that exceeds the available UIM coverage.
If your claim involves serious injuries and large money damages, and if you are facing a liability limits tender with additional benefits available through UIM policies, proceed with tremendous caution. Secure independent asset searches to confirm the wealth and assets of all responsible parties. If your case is worth more than the total of all UIM coverage/policies available, you should pause before signing a covenant. If the responsible parties have the ability to pay, you may prefer to forego early settlement opportunities and instead proceed to trial to secure a verdict and judgment. Following trial, you would have the right to collect immediately from all liability and UIM insurance sources and to also immediately seek additional payment by enforcing your judgment against all named defendants.
If you prefer to settle your injury claims at or below the total amount of insurance coverage available under all liability and UIM coverage sources, then you can settle the case involving liability and UIM in two stages as follows: first, you secure a liability limits tender and then provide written notice of liability tender to all UIM insurance carriers. The UIM insurers have thirty days to decide whether they will preserve their right to subrogation by paying the amount of the liability tender offer through a UIM advance payment or if they will waive their subrogation rights and allow the victim to settle directly with the liability insurance carrier. If they waive subrogation, the victim will sign a covenant and then receive the liability limits payment. Thereafter, the victim must present medical evidence and settlement demands to all UIM carriers and push toward a second payment through settlement with all UIM adjusters. If settlement can be reached, the UIM carriers will seek signatures on a UIM release, which contains the victim’s agreement that he or she can present no further claims against that policy.
Some insurance companies are adding Medicare hold harmless agreements to their settlement documents. Medicare has rapidly changing rights to share in injury settlement proceeds. If you expect to become eligible for Medicare or Social Security benefits within the thirty-month period following settlement, Medicare has potential rights to reach back and demand part of your settlement money.
Medicare rights are beyond the scope of this text. At settlement, you should determine whether Medicare paid any medical bills for you and also determine what rights they might have in your case. If Medicare paid some of your medical charges, they will provide their lien claim amount in writing or through their online portal. This lien must be paid. Holding the amount from settlement and paying promptly will protect Medicare’s interest. Thus, the hold harmless agreement is of no consequence. Most insurers currently will allow a claimant to refuse signature on the hold harmless provision and complete the settlement with only a general release. Try this approach and seek legal advice if you must sign a Medicare hold harmless agreement.
If you are represented by counsel, your attorney should handle all paperwork and settlement documentation for your benefit. Attorneys should also provide a thorough accounting of how all settlement monies will be collected and disbursed before you agree to this settlement and sign the release.