Consent to settle clauses (hammer clause) in Professional Liability policies for architects and engineers

Consent to settle clauses (hammer clause) in Professional Liability policies for architects and engineers-

What is consent to settle clause?  It is the clause in the Professional Liability policy that will state if/when/how a claim will be settled.  Will the insurance company only settle with your firms consent?  Or does the insurance company have the right to settle without your firms consent?  This is important to know at the time your firm purchases the Professional Liability policy because it does become important at the time of the claim and settlement.  Below are a few example clauses from some of the insurance companies:

Example #1

The Company will have the right to make, with the consent of the Named Insured, any settlement of a claim under this policy. However, the Named Insured’s consent shall not be unreasonably withheld.

Example #2

The Insureds agree not to settle or offer to settle any Claim, incur any Claim Expenses or otherwise assume any obligation or admit any liability with respect to any Claim without the Insurer’s prior written consent, which shall not be unreasonably withheld. The Insurer shall not be liable for any settlement, Claim Expenses, assumed obligation or admission to which it has not provided prior written consent.

Example #3

The Company will have the right to make, with the consent of the Named Insured, any settlement of a claim under this policy. If the Named Insured refuses to consent to a settlement recommended by the Company and acceptable to the claimant, the Company’s liability for the claim will not exceed the amount of damages for which the claim could have been settled, plus claim expenses incurred up to the date of such refusal or the applicable limit of liability, whichever is less.

The examples clauses each have slightly different descriptions of what the settlement will be in the policy.  Again be sure you understand what the clause is in the policy your firm has in place.  Please call or email your PUI Agent with questions.

consent

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