Tennessee Subscriber

In answering your question, we looked to Couch on Insurance Third Edition. According to Couch, in general the wording of the release that is used in accepting settlement dictates whether additional, but unknown at the time of settlement, claims should be honored. A release typically precludes further action even when the extent of damage was unknown when the release was signed, unless the wording is clearly ambiguous or subject to annulment.

In a Louisiana case, Hicks v. Fidelity-Southern Fire Insurance Co., 251 So.2d 526 (1971), the court addressed a homeowners loss. The insured who signed the release subsequently stated that he was not aware of the full extent of coverage or damage when he signed it. In interpreting Louisiana law, the judge ruled that, in the absence of fraud or duress, the release was a complete bar to future claims for damages arising from the same cause of loss—in the Hicks case, a hurricane.

A different outcome is seen in a Texas appeals case, Fidelity-Sothern Fire Insurance Co. v. White, 414 S.W.2d 188 (1967). In that case, the release was in the form of the insurer's check. The face stated the check was accepted in full and final payment, but the reverse stated it constituted release for items “stated in the draft.” The court ruled that the differing language could reasonably be considered ambiguous and remanded the case to the district court for further consideration.

Based on this analysis, the release should be reviewed. If it is not ambiguous or subject to annulment, it probably will stand. But that is a legal issue on which we cannot comment.