Auto Insurance Claims: Release form requirements, placentia california, liability lawsuits

Question
Hi Sheldon,
My mother, a long-time resident of California, was run over & killed by a hit-and-run driver in Placentia, California in August 2007.  The driver was found, both witnesses and DNA on the car established her liability for my mother's death, and she is currently being tried for her actions.  She reported the incident to her insurance company, State Farm, and they contacted me and my brother to settle the claim.  We were told on the phone that the driver had only $100,000 maximum liability coverage, and that was all that the company could pay out, but that this kind of death would normally allow for a much higher claim, up to $400,000.  They are not disputing their responsibility and are willing to pay the $100,000 to us.  However, in their release form, they want us to release not only State Farm but also the driver from any further liability, lawsuits, etc. in this matter.  We were surprised by this stipulation, willing of course to release State Farm from any further claims, but not the driver.  Is this normal procedure, and can they refuse to pay us if we will not release the driver from any further liability?  Why would anyone buy more insurance than the bare minimum if they could be released from further liability with the payment of that minimum payment?  We don't have any intent at this time of suing the driver, but we don't feel that it is right for the company to ask us to release her from any further liability, especially since the amount they can pay out is so much less than what they would have paid had she had more insurance.  Is this release form open to negotiation, are they stalling, or what??
Thanks for your help in this.

Answer
Lynne-

I am terribly sorry to hear about the loss of you mother.  What you are experiencing is my understanding of normal procedure.  Part of a settlement is always a full release of further action.  
If you reject the settlement, then the next step is legal action on your part. If you win a judgement for more than $100,000, and it sounds like you would have a very strong case, then State Farm will pay the first $100,000 and the rest will come from any assets and even wage garnishment from the driver. Her credit will be destroyed and she can be charged interest on the judgement amount until it is paid off.   
That is why higher liability limits are so important, it protects your assets and income.
I hope that is helpful to you.

Sheldon Maughan
Sacramento, Ca