In New York they can! I’ve fielded many calls from public adjusters who are worried their client will be waiving their rights to further pursue insurance proceeds if they sign the proof of loss sent by the insurance carrier or cash the check issued by the carrier. The short answer to those questions is…it depends.
Recently, the New York State Department of Financial Services, Office of General Counsel, issued an opinion dealing with this exact issue.1 The question presented was: Does the New York Insurance Law permit the inclusion of a release in a proof of loss form?
The author of the opinion found that there is nothing in New York Insurance Law that prohibits the inclusion of a release in a proof of loss form provided that such release is not broader than the scope of the settlement pursuant to N.Y. Comp. Codes R. & Regs. Sect. 216.6(g)(1998)(Reg. 64).
However, the rules and regulations do state that no insurer shall issue a check or draft in payment of a first-party claim or any element thereof, arising under any policy subject to this Part, that contains any language or provision that expressly or impliedly states that acceptance of such check or draft shall constitute a final settlement or release of any or all future obligations arising out of the loss. No insurer shall require execution of a release on a first- or third-party claim that is broader than the scope of the settlement.
So, in New York, insurers are permitted to put release language in the proof of loss but not on checks. You can read the full opinion here.
So how do you deal with the release language in the proof of loss form? My suggestion is to modify the proof of loss by crossing out the release language, writing the word “Undisputed” on the top of the form and then accompanying the POL with a cover letter indicating the acceptance of the undisputed amount but that you are not waiving any rights to pursue further insurance proceeds pursuant to the policy.
I leave you with a quote from author Lily Anderson who said: “It’s hard not to look sneaky when you’re sneaking.” Don’t let insurance companies sneak that release language into the proof of loss.
1 New York Office of General Counsel. Informal opinion. Re: Inclusion of a Release in a Proof of Loss Form [Oct. 26, 2001]. Available at https://www.dfs.ny.gov/insurance/ogco2001/rg110261.htm (last viewed Oct. 2, 2020).