Settlement & Release After a Washington Vehicle Crash

A settlement should occur after the claim is understood—not merely after an offer arrives

Before resolving a bodily-injury claim, determine whether the available evidence supports a reasonably complete understanding of:

• liability;
• comparative fault;
• the identities of all potentially responsible parties;
• all liability insurance;
• UIM and other first-party coverage;
• diagnosed injuries;
• future medical care;
• permanent impairment;
• past and future income loss;
• noneconomic damages;
• property damage;
• medical liens;
• PIP or health-plan reimbursement; and
• the claimant's expected net recovery.

A release is a contract relinquishing legal claims

Washington applies contract principles to settlement agreements and releases.

The document may contain language addressing:

• known claims;
• unknown claims;
• past injuries;
• future consequences;
• property damage;
• bodily injury;
• wrongful death;
• loss-of-consortium claims;
• agents and employees;
• employers;
• vehicle owners;
• insurers;
• successors and assigns; and
• other potentially responsible parties.

Identify every person and entity inside the release language

A release drafted for one negligent driver may use much broader language, such as releasing:

• the driver;
• vehicle owner;
• employer;
• agents;
• employees;
• family members;
• insurance companies;
• affiliated businesses;
• successors;
• assigns; or
• “all other persons, firms or corporations.”

Property damage and bodily injury should be treated as separate settlement decisions

A vehicle claim may be ready for resolution long before the medical claim is medically mature.

Washington's unfair-claims rules prohibit an insurer from failing to promptly settle a claim under one portion of coverage where liability is reasonably clear in order to influence settlement under another portion.

Settlement can become binding before the formal release is signed

In pending litigation, Washington Civil Rule 2A provides a mechanism for enforcing settlement agreements when a party later disputes what was agreed.

A general release does not automatically imply every additional obligation the insurer later drafts

Settlement terms beyond the basic release can create substantial additional risk.

Common additional provisions include:

• indemnification;
• hold-harmless clauses;
• defense obligations;
• medical-lien responsibility;
• subrogation responsibility;
• confidentiality;
• non-disparagement;
• Medicare representations;
• dismissal terms; and
• attorney-fee provisions.

Settling with one tortfeasor does not automatically release every other tortfeasor

RCW 4.22.060 expressly addresses settlement in multi-party fault cases.

The settling defendant receives an important benefit:

The claimant's remaining claim is correspondingly affected by the statutory settlement-credit rules.

A released defendant can still matter when the jury later allocates fault

Under RCW 4.22.070, Washington's fault allocation can include an entity previously released by the claimant.

Before settling with one defendant in a multi-defendant crash, analyze:

• the settling party's expected fault percentage;
• the amount paid;
• the collectability of remaining defendants;
• whether the claimant has comparative fault;
• whether joint-and-several liability may apply;
• the effect of the released party remaining in fault allocation; and
• available insurance from each defendant.

RCW 4.22.060 provides a judicial reasonableness procedure for specified settlements

The procedure becomes especially important in multi-party cases and covenant-judgment settlements.

When the statutory procedure applies in pending litigation:

1. five days' written notice generally must be given to the other parties and the court;
2. the proposed agreement must accompany the notice;
3. the court conducts a reasonableness hearing;
4. all parties may present evidence; and
5. the party seeking approval carries the burden of proving reasonableness.

Washington courts use nine factors to test reasonableness

Washington's Chaussee line of cases examines:

1. the releasing party's damages;
2. the merits of the claimant's liability theory;
3. the merits of the settling defendant's defense;
4. the settling defendant's relative fault;
5. the risks and expense of continued litigation;
6. the settling defendant's ability to pay;
7. evidence of bad faith, collusion or fraud;
8. the extent of investigation and preparation; and
9. the interests of parties who are not being released.

A covenant judgment is different from an ordinary policy-limits release

When an insured faces excess exposure after alleged insurer misconduct, the insured and injured claimant may sometimes resolve the underlying case through a structured agreement.

The structure can include:

• a stipulated judgment;
• a covenant not to execute against specified insured assets;
• assignment of the insured's bad-faith or coverage claims; and
• a judicial RCW 4.22.060 reasonableness determination.

Before releasing the tortfeasor, protect any Washington UIM claim

A settlement with the negligent driver's insurer can affect the UIM carrier's subrogation interests.

Tripp also holds that failure to provide required settlement notice does not automatically eliminate UIM coverage.

Settling below the tortfeasor's liability limit can create a UIM gap

Washington UIM law generally allows the UIM insurer to credit the full amount of liability insurance available to the tortfeasor when determining the UIM payment.

A settlement amount is not the same as the claimant's net recovery

Before accepting an offer, identify all payment interests that may attach to the proceeds.

These can include:

• chapter 60.44 medical-provider liens;
• PIP reimbursement or subrogation;
• health-plan reimbursement;
• workers' compensation recovery rights;
• Medicare;
• Medicaid or other public-benefit recovery;
• attorney fees;
• litigation costs; and
• other legally enforceable payment interests.

Guide 21 addresses Washington PIP, medical liens and reimbursement in detail.

Indemnification language deserves separate scrutiny

An insurer may propose that the claimant indemnify or hold the defendant harmless from:

• medical-provider liens;
• PIP claims;
• health-insurer claims;
• Medicare recovery;
• Medicaid recovery;
• workers' compensation claims; or
• other subrogation interests.

Washington requires court approval of settlements involving an unemancipated minor's beneficial interest

Washington Superior Court Special Proceedings Rule 98.16W establishes a protective process for settlements involving an unemancipated minor or qualifying incapacitated person.

The procedure can involve:

• a petition describing the claim and proposed settlement;
• information about related claims;
• medical information;
• attorney fees and costs;
• liens;
• an independent settlement guardian or attorney where required; and
• court-approved handling of the minor's proceeds.

Settlement of a wrongful-death claim requires beneficiary analysis

In a fatality case, the personal representative may prosecute the general wrongful-death action, but the damages are held for Washington's statutory beneficiaries.

Before settlement:

• identify all beneficiaries;
• separate wrongful-death and survival claims;
• identify child-death claims where applicable;
• identify estate interests;
• resolve liens and reimbursement;
• consider beneficiary-specific damages; and
• determine how settlement proceeds will be allocated.

Washington regulates what happens after an insurance settlement is reached

Current WAC 284-30-330 defines specified post-settlement delays as unfair claims practices.

The release should match the settlement that was actually negotiated

Before signing an insurer-drafted release, compare it line by line with the accepted settlement terms.

A settlement release can sometimes be challenged—but that should never be the plan

Washington treats releases as contracts. Contract doctrines such as fraud, misrepresentation, overreaching or qualifying mistake can sometimes provide grounds to challenge a release.

Citizen workflow before signing a Washington crash settlement

Primary authority behind this guide

Leading Washington cases