Following large-scale disasters like Hurricane Sally or Zeta, you will find that some insurance companies will make initial low-ball settlement offers and hope the policyholder takes the payment and doesn’t dispute the claim evaluation.
Insurance carriers have also included language on checks such as “full and final payment” or similar language and once the insured cashes the check the carrier argues that the insured is precluded from seeking additional amounts for the claim.
Luckily, Alabama has regulations in place to prevent this situation for its policyholders.
Ala. Admin. Code r. 482-1-125-.05 provides:
(1) No insurer shall indicate to an insured on a payment draft, check or in any accompanying letter that said payment is “final” or “a release” of any claim unless the policy limit has been paid or there has been a compromise settlement agreed to by the insured and the insurer as to coverage and amount payable under the policy.
(2) No insurer shall issue checks or drafts in partial settlement of a loss or claim under a specific coverage that contains language purporting to release the insurer or its insured from total liability.
If you receive an insurance payment that purports to “release” the claim or states it is a “final” payment, know that this is not allowed and you can require that the carrier re-issue the check to remove the limiting language.