In New York, they can! I have made many calls from public adjusters who are worried that their client will waive their right to continue insurance revenue if they sign a proof of loss sent by the insurance company or cash the check issued by the carrier. The short answer to these questions is … it depends.
The New York State Department of Financial Services, Office of General Counsel, recently issued an opinion on this very issue. 1 The question presented was: Does the New York Insurance Law allow the introduction of a release into 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 under NY Comp. Codes R. & Regs. Sect. 21
However, the rules state that no insurer may issue a check or draft payment of a first-party claim or any element thereof, derived from any insurance subject to this part, which contains any language or provision expressly or implicitly stating that approval of such control or draft shall constitute a final settlement or release of any or all future liabilities arising from the loss. No insurer shall require the execution of a release on the claims of a first or third party that is broader than the scope of the settlement.
So in New York, insurers are allowed to put release language in evidence of loss but not on checks. You can read the full statement here.
So how do you handle the release language in evidence of loss? My suggestion is to change the proof of loss by crossing out the language of release, writing the word "uncontested" at the top of the form and then accompanying POL with a cover letter stating that the undisputed amount is accepted but that you do not waive any rights to pursue additional insurance income under the policy .
I leave you with a quote from author Lily Anderson who said, "It's hard not to look sneaky when you sneak." Do not let insurance companies sneak that language as proof of loss.
1 New York Office of General Counsel. Informal opinion. Re: Inclusion of a release in evidence of loss form [Oct. 26, 2001]. Available at https://www.dfs.ny.gov/insurance/ogco2001/rg110261.htm (last viewed 2 October 2020).