Why You Should Never Sign a Policyholder Release without Legal Advice

When you negotiate a settlement of your insurance claim for property damage to your home or business, you may be asked to execute a release.  This document should be carefully scrutinized and analyzed by an experienced insurance attorney because it can have a devastating impact on unknown or future claims.  Even if you feel that your insurance carrier is treating you fairly and fully settling your claim, a release should never be formally executed unless it has been reviewed by your Florida insurance claims attorney.

The Texas case of O’Quinn v. General Star Indemnity Company provides an example of the impact of signing a release where the terms and language have not been carefully evaluated.  The insured purchased an insurance policy for her commercial property, Alibi’s, a nightclub and restaurant.  A fire caused substantial damage to the property.  While the insured conceded that General Star made partial payment, the policyholder claimed that the carrier improperly calculated the damage to the property.  The insured brought suit following a settlement alleging causes of action for breach of contract, breach of implied covenant of good faith and fair dealing and other claims.

The insurer issued a check for $429,211, which was accompanied by a release to be executed by the policyholder.  The Policyholder’s Property Damage Release indicating that it settled all claims but reserved the right to pursue “a supplemental claim for additional damages, if discovered, and to review and revisit the depreciation calculation”. The insured alleged her supplemental claim was for “additional damages”.  The insured also contended that the additional damages involved a mathematical calculation error in the amount of $29,042”.  The insured also requested that the insurer pay the policyholder’s attorney fees because the insurer refused to pay this sum.

General Star countered by citing the broad language of the release that covers “all claims, demands, actions, liens or causes of action of any kind whatsoever, founded in tort, common law, statute . . . including common law and statutory bad faith claims and claims for unfair claim settlement practices”.  The appellate court agreed with the insurance company that the alleged calculation error did not constitute “additional damages”.  The court reasoned that the policyholder was aware of all estimates in the negotiation of the settlement amount and that the insured was aware of the calculations to reach the final payment.

The key point is that even a release that appears to include exceptions might not adequately protect a policyholder.  The best practice is to never sign anything provided by an insurance company without having it reviewed by an experienced insurance attorney.  Your attorney can analyze the nature of your loss, obtain experts and review any settlement documents to ensure that your interest is protected.

My law firm represents policyholders in claims disputes in Miami and throughout Florida.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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