What is an insurance claim release?
An insurance claim release, also referred to as a settlement, isn’t as common in property insurance claims as they are in personal injury, but we are starting to see instances pop up.
In fact, with personal injury claims, it’s very common for an insurance adjuster to offer their claimant a minimal amount of money if they sign a document allowing the insurance company to be released of any financial liability.
However, there’s a reason why it’s not common with property insurance claims. If this happens to you, be wary.
How releasing your insurance’s liability affects you
While sinkhole insurance companies don’t really have the ability to offer you a settlement, considering they are obligated to repair your home to its pre-sinkhole state, they find a workaround to get themselves out of financial liability.
After they have completed the repairs on your home, you may receive a cash offer from your insurance company releasing them from liability. While this may look like a nice cash reward for your troubles, this is a losing situation for you.
A sinkhole policy is more important after a sinkhole
If your home has a history of sinkhole activity, there is a significantly higher risk that sinkhole activity will occur again; this can occur because the soil under your home is not stable due to simple geography or the repairs executed on the already present damage are not effective.
Therefore, releasing your insurance company’s obligation to your policy is likely to cost you much more than any settlement they may offer you.
Also bear in mind that even if you are no longer able to turn to your insurance company for sinkhole help, they may continue to collect premiums from you for sinkhole coverage – don’t pay for a policy that you cancel!
What to do if presented with a release
As a homeowner, you have the right to have your home repaired. While it may look scary, nothing requires you to sign a release after sinkhole repairs are completed (unless some portion of your claim is challenged and litigation ensues, but that’s another story).
That being said, do not sign a release! Contact an attorney for a consultation, as this may be a red flag that you’re looking at more trouble from your insurance company.