When you've resolved a car insurance claim, most companies will ask you to sign a release, indicating the claim is completely settled. It is necessary to sign a release for every car insurance claim. In most disputes, the party doing the paying wants to have closure. With car accidents, the party doing the paying is generally the insurance carrier. Before writing a check for $200,000, the carrier's people are going to want to make sure that they won't be asked to write additional checks for the same matter. A release ensures that when the parties shake hands, there are no surprises one, two or five years down the road. A well-drafted release will include the names of the parties, the date of loss and location of the loss. It will also include the insurance carrier, its referencing claim number and sum of money for which the claim has been settled. The release should state in clear terms that acceptance of the money means forfeiture of rights to initiate any future claims or lawsuits. While not central to its purpose, a good release should also make it clear that the settlement is not an admission of liability.
The philosophy of the release is one that runs parallel with the philosophy of the car insurance industry. That is, to introduce control and reduce risk. Despite the fact that the car insurance release is used in modern day litigation, the language and grammar may seem stilted and awkward to the point that some attorneys can have a difficult time understanding it. That's alright, as long as the release makes it unequivocally clear that with the payment of a certain sum of money, all claims and lawsuits will cease. This means cease by the claimant, by the claimant's spouse and by the claimant's next of kin.
Think of why this is necessary, even in an honorable world. A person settles an accident case and five years later, realizes she is still in pain. It's not clear if the pain is from the car accident. It may be or it may not be. However, goaded on by family members, she may begin to think how an accident five years ago changed her life profoundly and irreversibly. She may find that the money from the settlement is now gone and that nothing tangible is left to show for the scars of an injury that, in her mind, still haven't healed. A release prevents this woman from seeking additional settlement payouts from those she feels are responsible for her suffering.
It is necessary for all insurance companies and claimants to sign releases after each claim is settled. It guards them both from additional trouble years down the road.