Auto Insurance Claims: Release of Liability, underinsured motorists, release of liability form

Question
Hi, I was in an accident where the other person hit me from behind. The police report said it was his fault and his insurance company took responsibility. He had a minimum policy and his insurance is offering it all to me. Unfortunately it won't cover all my bills so I want to keep open the option of suing him. However, to get my settlement the insurance company is asking me to sign a release of liability form. Are they allowed to do that? Do I have to sign the form in order to get my settlement?

Answer
Hi Mittal,
In order to receive a payment at this moment, you must execute a release of all claims against the insurance company and the driver/insured agreeing  that by accepting their check, the claim is closed forever.  The insurance company has a duty to defend their client and will not make a payment that still leaves their insured open to a suit.

You have several possible options available.
First, have you investigated the financial record of the at fault party?  Does he have any assets that would be collectable should you win in court?  An uncollectible judgement is worthless, especially when you consider the amount that it will cost you in attorney fees.
If you choose to retain an attorney and file suit against the driver, you need to thoroughly review his fee schedule and have an agreement that he is not entitled to any of the money presently being offered, only his fee (usually 40%) of the additional amount that he gets in a court settlement.

If you carry higher limits of coverage on your own policy with matching limits of UNDERINSURED MOTORISTS coverage, you can get written permission from your own company to settle the claim for the policy limits with the adverse company and open an underinsured motorists claim against your own company.  This type of claim is usually handled through arbitration and you would need the assistance of an attorney whose fee would be between 33-40% of the amount received, but no portion of the amount that you received from the adverse insurance company.

I hope this information is of help.  Please write again if you feel that I can be of more assistance.  Mark your question PRIVATE and tell me the amount of insurance carried by the at fault party, the amount of underinsured motorist coverage on your own policy and your opinion of the value of your claim.
Your feedback by rating my answer will be appreciated.
Sincerely,
Bennie
San Francisco Bay Area