Hammer Clause in a Professional Liability Policy

Hammer clause in a professional liability policies for architects/engineers –

First, it is important to understand the definition of a hammer clause. The hammer clause is the insurance companies right to settle a claim without your firms consent. Most of the insurance companies our agency works with do not have a hammer clause in the policy. Here are a few examples of the consent to settle.

Example one:


  1. The Insurer has the right and duty to defend any claim against the Insured seeking amounts that are payable under the terms of this Policy, even if any of the allegations of the claim are groundless, false or fraudulent. The Insurer will designate or, at its option, approve counsel to defend the claim. The Insurer is not obligated to defend any claim or pay any amounts after the applicable limit of liability has been exhausted.
  2. The Insurer will not settle any claim without the informed consent of the first Named Insured.


Example two:


The Insureds shall provide the Insurer with all information, assistance and cooperation which the Insurer reasonably requests and agrees that in the event of a Claim the Insureds will do nothing that shall prejudice the Insurer’s position or its potential or actual rights of recovery. The Insurer may make any investigation it deems necessary. The Insurer shall have the right and shall be given the opportunity to effectively associate with the Insureds in the investigation, defense, and settlement (including the negotiation of a settlement) of any Claim that appears reasonably likely to be covered in whole or in part by this Policy. The Insurer will not settle any Claim without the written consent of the First Named Insured shown in Item 1. of the Declarations. The Insurer’s designation or appointment of legal counsel by or on behalf of an Insured does not change the applicability of the remaining terms and conditions of this Policy, including any Deductible provisions of this Policy specifying that only reasonable and necessary Claim Expenses reduce an Insured’s Deductible.

There are some cases, depending on the policy, that will have a hammer clause. If your firm has had excessive claims or policies that are not with admitted insurance companies, these types of policies may have a hammer clause. If you have any questions about hammer clauses please call or email your Professional Underwriters agent for assistance.

hammer clause


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