KNOW WHAT YOU ARE GIVING UP BEFORE SIGNING A LIABILITY RELEASE

Why You Should Be Careful Before Signing a Liability Release

After a motor vehicle accident, you may receive calls from one or more insurance companies.

One of those calls may come from a bodily injury adjuster representing the insurance company for the driver who is alleged to be responsible for the accident.

The adjuster may ask about your injuries, treatment, employment, recovery and other circumstances surrounding the collision.

You may also be offered a settlement.

If you accept the settlement, the insurance company may require you to sign a liability release or settlement release.

This is an important legal document. You should understand what you are agreeing to before signing it.

What Is a Liability Release?

A liability release is a legal agreement in which a person releases another party from specified claims, liabilities or demands in exchange for consideration, such as a settlement payment.

In the context of a motor vehicle accident, the release may identify the accident, the parties involved, the settlement amount and the claims or liabilities being released.

The exact wording matters.

A release is not simply a receipt confirming that you received money from an insurance company. Depending on its wording, signing it may have significant consequences for your ability to pursue additional compensation relating to the accident.

The effect of a particular release depends on its language, the surrounding circumstances and the applicable law.

What Rights Could You Be Giving Up?

The most important question before signing a release is:

What claims and rights does this document release?

A broadly worded release may affect your ability to pursue additional compensation for claims arising from the accident.

Depending on the wording and circumstances, issues can include:

• Pain and suffering;
• Past income loss;
• Future income loss;
• Loss of earning capacity;
• Medical expenses;
• Rehabilitation expenses;
• Future treatment;
• Future care costs;
• Out-of-pocket expenses;
• Other accident-related damages; and
• Potential claims that have not yet been fully identified.

This does not mean every release necessarily extinguishes every possible claim. The precise wording of the document and the circumstances surrounding the agreement must be examined.

That is precisely why you should understand the document before signing it.

Why Signing Too Early Can Be a Problem

Some injuries are immediately apparent after a collision. Others develop or become more significant over time.

For example, a person may initially believe that they have suffered only relatively minor injuries but later experience:

• Persistent neck or back pain;
• Headaches;
• Concussion symptoms;
• Memory or concentration difficulties;
• Sleep problems;
• Anxiety or psychological symptoms;
• Reduced ability to work;
• Chronic pain; or
• Long-term functional limitations.

It can take time for the medical prognosis to become clear.

This is one reason accepting a settlement before you understand the nature and likely duration of your injuries can carry significant risk.

What If I Feel Fine When the Insurance Company Makes an Offer?

Feeling better shortly after an accident does not necessarily establish that you have completely recovered.

Some injuries take time to become apparent, and some symptoms fluctuate during the recovery process.

Before accepting a final settlement, consider whether you have had sufficient time to understand:

• The nature of your injuries;
• Your expected recovery;
• Whether additional treatment may be required;
• Whether your ability to work has been affected;
• Whether you may have future income loss;
• Whether you have incurred all relevant expenses; and
• Whether there may be other damages associated with the accident.

Your medical prognosis is an important part of understanding the potential value and risks of settling a personal injury claim.

Is a Signed Liability Release Binding?

A properly executed settlement release can be a legally binding agreement.

Courts generally expect parties to honour agreements they have entered into voluntarily and with sufficient understanding of their terms.

This means you should not assume that you can simply change your mind after signing a release.

Discovering later that your injuries were more serious than you expected does not automatically mean that the release can be cancelled.

The specific circumstances matter, including the wording of the agreement, the circumstances in which it was negotiated and signed, and any legal issues affecting the validity or enforceability of the agreement.

Can You Change Your Mind After Signing a Release?

You should assume that signing a final liability release is a serious decision.

Trying to undo a settlement after the release has been signed can be difficult and may require litigation.

The fact that an injury becomes more serious after the settlement does not, by itself, automatically invalidate the agreement.

There can be legal grounds in particular circumstances for challenging an agreement, but those circumstances are fact-specific and should not be relied upon as a safety net for signing a document you do not understand.

The safest approach is to obtain legal advice before signing a release if you are uncertain about its consequences.

What Is an Unconscionable Agreement?

In exceptional circumstances, a settlement agreement may be challenged on legal grounds such as unconscionability.

Unconscionability is not simply another way of saying that someone later regrets accepting a settlement.

Courts examine the circumstances surrounding an agreement and whether there was a sufficiently serious imbalance or unfairness that justifies intervention.

The existence of a settlement that later appears financially disappointing does not automatically make the agreement unconscionable.

If you believe you signed a release under unfair or improper circumstances, you should obtain legal advice about the specific facts rather than assuming the release can simply be cancelled.

The Insurance Adjuster Works for the Insurance Company

It is important to understand who you are communicating with after an accident.

An insurance adjuster representing the at-fault driver’s insurer does not act as your personal injury lawyer.

The adjuster’s role is to handle the insurance company’s claim and evaluate the circumstances of the accident and the potential liability of the insured.

This does not mean an adjuster is acting improperly by asking questions or making a settlement offer. It means you should understand the respective interests involved.

You are entitled to consider the settlement offer carefully and obtain independent legal advice before deciding whether to accept it.

Be Careful About Giving a Statement

Following a collision, an insurer may ask you questions about what happened and about your injuries.

You should always provide truthful information.

At the same time, avoid guessing or speculating about matters you do not know.

For example, you may not yet know how long an injury will last, whether you will require future treatment or whether your ability to work will be affected in the long term.

If you are being asked detailed questions about your injuries or being presented with a settlement proposal, you may wish to obtain independent legal advice before making decisions that could affect your rights.

What Should You Look for in a Liability Release?

Before signing a release, the document should be read carefully.

Among other things, you should understand:

• Who is being released?
• What accident or event is covered?
• What claims are being released?
• Who is receiving the release?
• What amount is being paid?
• Are legal fees or expenses addressed?
• Does the release cover future claims?
• Does it affect claims involving other parties?
• Are there conditions attached to the settlement?
• Are there other insurance policies that may be relevant?

These questions cannot be answered simply by looking at the dollar amount offered.

A Settlement Offer Is Not the Same as a Final Settlement

Receiving an offer from an insurance company does not necessarily mean that you have to accept it.

A settlement offer can be negotiated.

You can ask questions about how the insurer arrived at the proposed amount and what claims the insurer expects you to release in exchange for payment.

If you have not yet signed a final agreement, you generally have an opportunity to obtain legal advice and consider your options before making a binding commitment.

How Is a Personal Injury Settlement Evaluated?

A personal injury settlement should not be evaluated solely by comparing the offered amount with what you expected to receive.

A proper evaluation considers the nature of the injuries and the losses associated with them.

Depending on the circumstances, damages may include:

• Pain and suffering;
• Past income loss;
• Future loss of earning capacity;
• Medical expenses;
• Rehabilitation expenses;
• Future treatment;
• Cost of future care;
• Out-of-pocket expenses; and
• Other losses supported by the evidence.

The applicable Alberta law and the facts of the particular claim determine which damages may be recoverable.

What About Future Losses?

Future losses are one of the reasons settling a personal injury claim too early can be risky.

A serious injury may affect a person’s ability to work, earn income or perform ordinary activities for years after the accident.

It may also result in future medical treatment, rehabilitation or care.

These potential losses should be considered before agreeing to a final settlement.

If the long-term consequences of an injury are still uncertain, it can be difficult to properly evaluate a final settlement without appropriate medical and financial information.

What If the Insurance Company Says the Offer Is Only Available for a Short Time?

A settlement offer may sometimes be presented with a deadline.

A deadline can create pressure, particularly when someone is recovering from an accident and is concerned about medical bills or lost income.

However, pressure to make a quick decision should not replace understanding what you are being asked to sign.

If you are uncertain about a settlement offer or release, consider obtaining independent legal advice before signing.

Can I Negotiate an Insurance Settlement?

Personal injury settlements are often negotiated.

The initial offer from an insurer does not necessarily represent the final amount that could be negotiated or recovered.

A lawyer can evaluate the available evidence, identify the damages that may be relevant and negotiate with the insurer on your behalf.

Whether a particular settlement is reasonable depends on the individual circumstances of the claim.

What If I Already Signed the Release?

If you have already signed a liability release and are now concerned about what you agreed to, do not assume that nothing can be done and do not assume that the release can automatically be cancelled.

Have the actual document reviewed by a lawyer.

Important questions may include:

• What exactly does the release say?
• What claims does it purport to release?
• When and how was it signed?
• What information was available at the time?
• What representations were made during settlement negotiations?
• Were there circumstances affecting your ability to understand the agreement?
• Did you have legal advice before signing?

The answer will depend on the facts and the actual wording of the agreement.

What If My Injuries Became Worse After I Signed?

This is an important question and one that should be addressed carefully.

A worsening injury after settlement does not automatically mean that a signed release is invalid.

A release may have been intended to settle known and unknown consequences of the accident, depending on its wording.

Whether anything can be done depends on the particular agreement and the circumstances in which it was made.

If this has happened to you, have the release reviewed by a lawyer rather than assuming that your claim is either automatically over or automatically recoverable.

Do Not Confuse an Insurance Release With Other Accident Documents

After a motor vehicle accident, you may encounter many different documents.

These can include insurance forms, medical documents, authorizations, settlement documents and releases.

Not every document has the same legal effect.

If you are uncertain about a document you have been asked to sign, ask what the document does and obtain independent legal advice when appropriate.

Why Independent Legal Advice Matters

The most important consideration is that you understand the decision you are making.

A personal injury lawyer can help you understand:

• The nature of the claims that may be available;
• The damages that may be relevant;
• The significance of your medical prognosis;
• The insurance coverage available;
• The wording of the proposed release;
• The risks of settling now;
• The potential alternatives to settlement; and
• The legal process if the matter cannot be resolved.

Obtaining legal advice does not mean that you must proceed to court.

Many personal injury claims are resolved through negotiation and settlement.

Questions to Ask Before Signing a Liability Release

Before signing a final settlement release after a motor vehicle accident, consider asking:

1. What exactly am I agreeing to?
2. What claims am I releasing?
3. Does the release include future injuries or losses?
4. Do I understand my medical prognosis?
5. Have I fully documented my lost income?
6. Could I have future treatment expenses?
7. Could my ability to work be affected in the future?
8. Are there other insurance policies that may provide coverage?
9. Is this the final settlement of my injury claim?
10. Have I obtained independent legal advice?

Common Questions About Liability Releases in Alberta

What is a liability release after a car accident?

A liability release is a legal agreement intended to release specified claims or liabilities in exchange for consideration, often a settlement payment. The precise effect depends on the wording of the document and the circumstances.

Should I sign a liability release from the insurance company?

You should understand the document and the consequences of signing it before doing so. If you have suffered injuries and are uncertain about the settlement or release, obtaining independent legal advice can help you make an informed decision.

Can I sue after signing a liability release?

A properly executed release can prevent further claims covered by the agreement. Whether a particular claim remains available depends on the wording of the release and the circumstances surrounding the agreement.

What happens if my injury gets worse after signing a release?

A worsening injury does not automatically invalidate a signed release. The actual document and circumstances surrounding the settlement must be reviewed to determine whether there is any potential legal basis for challenging it.

Can I cancel a settlement after signing?

Cancelling or setting aside a signed settlement can be difficult. Exceptional legal circumstances may justify a challenge, but simply regretting the settlement or later discovering that an injury was more serious does not automatically cancel the agreement.

Can an insurance company pressure me to sign a release?

An insurer may present a settlement offer and may request that you sign a release as a condition of settlement. If you feel pressured or do not understand the document, you should consider obtaining independent legal advice before signing.

Can I negotiate the settlement before signing the release?

Settlement negotiations can occur before a final agreement is reached. A personal injury lawyer can assess the claim and negotiate with the insurer where appropriate.

What if I don’t know how serious my injuries are yet?

This is an important reason to be cautious about accepting a final settlement. If your medical prognosis is uncertain, you may not yet have enough information to properly evaluate the long-term consequences of your injuries.

Does signing a release affect all my insurance claims?

Not necessarily. The effect of a release depends on its wording and the parties and claims covered by the agreement. Other insurance policies may also have separate terms and obligations.

Do Not Let a Settlement Deadline Make the Decision for You

A personal injury settlement is an important financial and legal decision.

Once a final release is signed, it may be extremely difficult to pursue additional compensation for claims covered by the agreement.

Take the time to understand what you are signing.

If you are unsure whether a settlement offer is fair or whether a proposed release affects your rights, independent legal advice can help you understand your options before you make a decision that may be difficult to reverse.

How Moustarah & Company Can Help

Moustarah & Company is an Edmonton personal injury law firm representing people who have suffered injuries in motor vehicle accidents and other circumstances.

If an insurance company has offered you a settlement or has asked you to sign a liability release, our lawyers can review the circumstances of your claim and help you understand the legal implications of the proposed settlement.

We can help evaluate the nature of your injuries, the losses associated with the accident, the available insurance coverage and the proposed settlement before you make a final decision.

If you have already signed a release, we can also review the actual document and circumstances surrounding the agreement to determine what legal options, if any, may remain available.

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