Should You Sign an Insurance Settlement After a Wrongful Death?

Losing a loved one because of someone else's negligence or wrongful conduct can leave a family facing emotional loss, unexpected expenses, and difficult financial decisions. Unfortunately, many decisions are made almost immediately after death. One of the most important decisions a family may face is whether to accept and sign an insurance settlement.

An insurance company may contact the family or the estate with an offer to resolve the claim. The amount may seem helpful, particularly when medical bills, funeral expenses, lost income, and other financial obligations are adding up. But accepting a settlement is more than simply receiving a check. In many cases, signing a settlement agreement or release means agreeing to give up the right to pursue additional compensation related to the claim. That is why it is important to understand what an insurance settlement actually is, what signing one can mean, and what could happen if you accept—or decline—the offer.

What Is an Insurance Settlement?

An insurance settlement is an agreement between the parties intended to resolve a legal claim without continuing to trial. In a wrongful death case, an insurance company representing the person, business, or other party allegedly responsible for the death may offer a specific amount of money to resolve the claim.

For example, if a loved one dies in a motor vehicle accident, the at-fault driver's insurance company may make a settlement offer to the estate or the person legally authorized to pursue the claim. The settlement may be intended to compensate for legally recoverable losses associated with the death.

Under New York law, damages in a wrongful death action can include certain pecuniary—or financial—injuries resulting from the death, as well as qualifying medical and funeral expenses. New York law also provides for interest on the principal amount recovered from the date of death. Importantly, the amount an insurance company offers is not necessarily the same as the amount the family may ultimately be entitled to recover. An insurance company has its own financial and legal interests to consider when evaluating a claim.

What Does It Mean to Sign a Settlement?

A settlement agreement will generally include a release. A release is a legal document in which the person or entity receiving the settlement agrees to release the responsible party and/or other parties from specified claims. This distinction is important.

Signing the settlement paperwork is not simply acknowledging that you received money. Depending on the language of the agreement, it may prevent you from bringing additional claims related to the incident in the future.

New York courts have recognized that a clear and unambiguous release can serve as a complete bar to an action involving the claims covered by that release. Although releases can potentially be challenged in certain circumstances—such as fraud, duress, or mutual mistake—those situations are exceptions, not something a person should rely on after signing. For that reason, a settlement agreement should be carefully reviewed before it is signed.

What Could Happen If You Sign the Settlement?

Accepting a settlement can have several consequences.

1. You receive the agreed-upon settlement amount

The most obvious outcome is that the estate or appropriate claimant receives the amount agreed upon in the settlement. For a grieving family, having access to funds can help address expenses associated with the death and provide financial stability during an extremely difficult period. However, the settlement amount may not simply be paid directly to one family member.

New York law provides specific rules concerning the distribution of damages recovered in wrongful death cases. Depending on the circumstances, the proceeds may be distributed among individuals entitled to share in the recovery based on their legally recognized pecuniary injuries.

2. The claim may be resolved permanently

Signing a release generally means the parties are agreeing that the covered claims are resolved. That can provide certainty. The family knows the amount being received rather than having to continue pursuing a potentially lengthy claim.

But certainty comes with a tradeoff.

Once the release becomes effective, the family may no longer be able to pursue additional compensation for claims covered by the agreement.

3. You may give up the ability to seek more compensation later

This is one of the most important consequences to understand.

Suppose an insurance company offers a settlement relatively early in the process. The family accepts the offer and signs a release. Later, additional information could come to light about the accident, the deceased person's financial contributions to the family, available insurance coverage, or another potentially responsible party. If the release covers those claims, the family may be unable to pursue additional compensation.

This is why it is important to understand exactly what claims the release covers before signing it.

4. The settlement may require additional legal and estate procedures

A wrongful death settlement can involve more than negotiating an amount with an insurance company.

New York law provides a specific process for compromising a wrongful death action. When court approval is required, the court reviews the proposed compromise and determines whether the amount is adequate. The law also addresses the handling of settlement funds, approved expenses, attorneys' fees, liens, and distribution to those entitled to the recovery.

In other words, receiving a settlement offer does not necessarily mean the process is finished.

What Could Happen If You Do Not Sign the Settlement?

Declining or not immediately accepting an insurance settlement does not necessarily mean that you are giving up your claim. Instead, several different things could happen.

1. The parties may continue negotiating

A settlement offer is not necessarily the final amount an insurance company is willing to pay. The parties may continue discussing the value of the claim and the evidence supporting it. Additional documentation may also become available during the process, including medical records, financial records, accident evidence, witness information, employment records, or other documentation relevant to the claim.

2. A different settlement could eventually be reached

If negotiations continue, the parties may ultimately agree to a different settlement amount or different settlement terms. There is no guarantee that continued negotiations will result in a higher offer, however. The outcome depends on the facts of the case, available insurance coverage, liability, damages, evidence, and numerous other factors.

3. The case could proceed to litigation

If the parties cannot reach an agreement, the personal representative may need to pursue the claim through litigation. New York's wrongful death statute allows the decedent's personal representative to maintain an action based on the wrongful act, neglect, or default that caused the death. Under the current statute, the action generally must be commenced within two years after the decedent's death, although exceptions can apply. Litigation can take significantly more time and involve additional costs, legal proceedings, discovery, depositions, negotiations, and potentially a trial. And importantly, going to court does not guarantee a larger recovery.

A settlement provides a guaranteed agreed-upon amount once the agreement is finalized. A lawsuit leaves the ultimate outcome to the legal process.

4. You could ultimately recover less—or nothing

It is important to understand the other side of the decision. Rejecting a settlement does not guarantee that a family will receive more money.

If a case proceeds to litigation, the outcome could be less favorable than the insurance company's original offer. There may also be disputes concerning liability, damages, available insurance coverage, or other legal issues. That is one reason settlement decisions should be based on the specific circumstances of the case rather than simply assuming that rejecting an offer will result in more compensation.

Why Would an Insurance Company Offer a Settlement?

Insurance companies routinely evaluate claims and may make settlement offers when they believe a claim can potentially be resolved without continuing litigation. A settlement can benefit both sides:

• For the insurance company, settling can limit litigation costs and uncertainty.

• For the claimant or estate, settling can provide compensation without the time, expense, and uncertainty associated with pursuing the case through trial.

But an insurance company's settlement offer should not automatically be interpreted as an indication of the full value of a wrongful death claim. The amount offered may be based on the information the insurance company currently has. That information can change as additional evidence becomes available.

What Should You Review Before Signing?

Before accepting a wrongful death settlement, it is important to understand the agreement and the claim it is resolving. Some important questions include:

What claims are being released?

Read the release carefully.

Does it apply only to the wrongful death claim? Does it include other claims arising from the same incident? Does it release multiple potentially responsible parties?

The exact language matters.

How much insurance coverage is available?

Understanding the available insurance coverage can be important when evaluating a settlement.

New York Insurance Law provides mechanisms under which certain claimants can request information about applicable liability insurance coverage and policy limits.

Are there other potentially responsible parties?

A fatal accident may involve more than one potentially responsible person or entity.

For example, depending on the circumstances, a wrongful death claim could potentially involve a driver, vehicle owner, employer, property owner, manufacturer, contractor, or another party.

Settling with one party may affect claims involving others depending on the circumstances and settlement language.

Are there outstanding medical bills, funeral expenses, or liens?

Settlement proceeds may need to account for qualifying expenses, liens, attorneys' fees, and other obligations.

New York law specifically addresses certain expenses and the distribution of recovered damages.

Who is legally entitled to receive the settlement?

A wrongful death settlement is not necessarily divided equally among surviving family members.

New York law provides rules concerning who may benefit from a wrongful death recovery and how damages are distributed based on the applicable circumstances.

Does Signing a Settlement Mean You Can Never Challenge It?

Not necessarily in every circumstance, but challenging a signed release can be difficult.

New York courts recognize that a valid, clear release is generally binding. A release may potentially be challenged under certain traditional legal grounds, including fraud, duress, or mutual mistake. That is an important distinction.

It is much better to understand the settlement and release before signing than to assume you can simply change your mind afterward.

What Should You Do Before Accepting a Wrongful Death Settlement?

There is no single settlement amount or decision that is appropriate for every wrongful death case. Before signing, consider:

• What exactly is the insurance company offering?

• What claims will you be releasing?

• What insurance policies and coverage limits may apply?

• Are there other potentially responsible parties?

• What financial losses resulted from your loved one's death?

• Are medical expenses, funeral expenses, liens, or other obligations involved?

• Who is legally entitled to share in the recovery?

• Has enough evidence been gathered to evaluate the claim?

• What are the applicable deadlines for pursuing the claim?

• Does the proposed settlement adequately address the circumstances of the case?

These questions are especially important because every wrongful death case is different.

Do Not Let the Settlement Check Be the Only Thing You Consider

After losing someone you love, receiving an insurance settlement offer can create complicated emotions. You may want the matter resolved. You may need the money. You may also worry about making the wrong decision. There is nothing wrong with considering settlement. In many cases, resolving a claim through settlement can provide families with financial certainty without the uncertainty of trial. But signing a settlement is an important legal decision.

Before signing a release, make sure you understand what you are agreeing to, what claims are being resolved, what compensation may be available, and what rights you may be giving up.

At The Law Office of Albert Zafonte Jr., we understand that no amount of compensation can undo the loss of a loved one. Our role is to help families understand their legal options, evaluate the circumstances of a wrongful death claim, and make informed decisions about how to move forward.

If you have received an insurance settlement offer following the wrongful death of a loved one in New York, you should understand the agreement before signing it.

Contact The Law Office of Albert Zafonte Jr. to discuss your situation and learn more about your legal options.

This article is intended for general informational purposes and does not constitute legal advice. New York wrongful death laws and deadlines can vary depending on the circumstances of a particular case. Speaking with a qualified attorney about the specific facts of your situation can help you understand your rights and options.