Call Us 866.940.1101 ☰ ˟
866.940.1101
Logo
  • Home
  • About Us
    • About Us
    • Employee Directory
    • Partners Page
    • Event Calendar
    • Refer a Friend
  • Get A Quote
  • Products
    • Lawyers Malpractice Insurance
    • Professional Liability Coverage For Attorneys
    • Accountants Professional Liability
    • Dentist Malpractice Insurance
    • Business Owners Policy
    • Cyber Liability Insurance
    • Workers Compensation Insurance
    • Title Agents E&O Insurance
    • Paralegal Malpractice Insurance
  • Testimonials
  • Common Terms
    • Common Terms
    • Frequently Asked Questions
  • Blog
  • Contact
  • Areas We Serve
    • Grand Rapids, MI
    • Detroit, MI
    • Lansing, MI
    • Kalamazoo, MI
Home > Blog > Attorney Malpractice Hammer Clause
MONDAY, JANUARY 23, 2023

Attorney Malpractice Hammer Clause

Hammer on Wooden Table

You will not find the Hammer Clause anywhere in your policy. The Hammer Clause is slang for forcing a settlement in the Defense, Indemnification, and Cooperation section of your policy.

As with other professional errors and omissions policies, the attorney malpractice insurance policies commonly gives the insured the right to tell the insurer whether to settle the claim or not. As a professional you may not want to settle because you feel that you did nothing wrong, or it may damage your reputation. Also, settling a claim when you did nothing wrong will end up on your loss history and could cost you more for insurance premiums in the future.

The insurer looks at the claim from a dollars and cents perspective in terms of how much it will cost to resolve the claim. Given the facts, claims counsel estimates chances of winning, the cost of defending, and the ultimate indemnity payment. If a case goes to trial, the defense costs alone can exceed the settlement claim cost. There is no guaranteed at trial. Ultimately, as far as the malpractice insurer is concerned, with a choice between a $500,000 defense bill with no indemnity payment versus a $25,000 settlement, guess which option the insurer picks?  Sorry to say for insurers normally it not a question of who is right and who is wrong, but how much it costs.

If a case is not settled before trial, be prepared for depositions, producing documents, and a large amount of your personal time assisting in the claim’s defense.

Given these facts, most professionals want claims settled quickly. But say you don’t want to go along with the insurer’s claims department or the malpractice attorney recommendation. It is your right according to your policy as a professional to refuse to settle. Now what happens?

 

The Hammer Clause:

The attorney malpractice insurance policy Insuring Agreements or Defense & Settlement sections state that even though the insurer will not settle a claim without the insured’s consent, the insurer’s exposure to the loss is limited to the amount that would have been paid if the insured had taken the insurer’s recommendation.  In other words, if an insured does not accept the insurer’s recommendation, then the insured is liable for any additional costs over what the case could have been settled for.  The insurer can put the ‘Hammer’ to you if you do not settle when they recommend.

 

This is a sample of what is commonly referred to as a “Hammer Clause” from an attorney malpractice liability policy form:

SETTLEMENT

The Company shall have the right to negotiate a settlement or compromise of a claim as it deems appropriate but shall not commit to settlement of a claim without the written consent of the Named Insured. If the Named Insured refuses to consent to a settlement or compromise recommended by the Company and acceptable to the claimant, then the Company’s Limits of Liability under this Policy shall be reduced to the amount for which the claim could have been compromised or settled, plus all claim 

Click Here to Obtain an Attorney Malpractice Insurance Quote

 

Lee

 
 
   Contact Me Today
   Lee Norcross, MBA, CPCU
   California License # 0D87292
    L Squared Insurance Agency, LLC ® DBA in California as
   L2 L Squared Insurance Agency, License # 0L93416

    Managing Director, CEO
    Click here to contact Lee Norcross, MBA, CPCU, CPIA

     (616) 940-1101 Ext. 7080

 
Posted 5:53 PM

Tags: attorney malpractice insurance, hammer clause
Share |


No Comments


Post a Comment
Required
Required (Not Displayed)
Required


All comments are moderated and stripped of HTML.

NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2013
  • 2011

  • lawyers professional liability insurance(429)
  • attorney malpractice insurance(383)
  • attorney malpractice(337)
  • legal malpractice(223)
  • legal liability(134)
  • cyber insurance(102)
  • data breach(92)
  • ethics(87)
  • erp(57)
  • malpractice insurance(54)
  • claims(39)
  • title agency e&o(36)
  • accountant e&o(34)
  • extended reporting period endorsement(30)
  • tail(29)
  • phishing(25)
  • legal malpractice insurance(21)
  • claims made coverage(21)
  • extended reporting period(21)
  • prior acts(21)
  • cyber security(19)
  • cyber liability(18)
  • accountant errors & omissions(18)
  • claims reporting(17)
  • crime insurance(16)
  • ransomware(16)
  • claim prevention(16)
  • attorney protective cle(14)
  • the hartford weekly newsletter(14)
  • attorney protective cle webinar(14)
  • 2022 mcgowan pro cpe webinar for accountants(13)
  • mcgowan webinar series for cpas 2021(12)
  • professional liability insurance(12)
  • retirement tail(12)
  • business owners insurance(11)
  • legal liability insurance(11)
  • fee suits(10)
  • full prior acts(10)
  • attpro tip of the month(10)
  • accountant errors & omissions insurance(10)
  • non-practicing erp(9)
  • bop(9)
  • cyber liability insurance(9)
  • title agent errors & omissions(9)
  • cyber crime(9)
  • claims made(9)
  • prior acts date(8)
  • webinar(8)
  • step rating(8)
  • lawyers(8)

View Mobile Version
Logo
Quick Links
Home Our Products Customer Service Payment Options Common Terms
About Us Refer A Friend Our Carriers Blog Contact Us
Location
2430 Camelot Ct SE
Grand Rapids, MI 49546

Local: 616.940.1101
Toll Free: 866.940.1101
Email: info@L2ins.com
Facebook Twitter Social LinkedIn
© Copyright. All rights reserved.
Powered by Insurance Website Builder