Does Your Professional or Malpractice Policy Have a Hammer Clause? Here’s Why It Matters
As you enter the world of Insurance, you must understand every aspect of it, and that includes all coverages, premiums, and clauses. One aspect always overlooked, but extremely crucial is the Hammer Clause. Read through this blog to understand what it is and why it matters.
What is a Hammer Clause?
A Hammer Clause is a resource in your insurance policy that tackles how settlements are handled. Let’s suppose that your case goes to court, and your Insurer has offered you the settlement amount of $100,000, which will be paid off by it. If you decline this offer, and the court awards $130,000, then you would be liable to pay off $30,000 on your own. Thus, this clause is designed for your benefit and financial safety, and to avoid higher liabilities for the Insured.
Why Does It Matter?
The Hammer Clause is an extremely valuable aspect of your insurance policy, and here’s why:
a. Financial Exposure
Given that you do not have a hammer clause on your insurance policy, the insurer would typically pay the full settlement amount of a judgment up to your policy limits. However, in the presence of a Hammer Clause, you are likely to end up with the increased burden of out-of-pocket expense, since if you reject the agreement offered, you are liable to pay the additional settlement amount yourself provided that the settlement decided is not in your favor.
b. Settlement Decisions
With the presence of a Hammer Clause in your policy, your decision-making process can be significantly influenced. Thus, it depicts the importance of carefully reviewing the settlement offers and keeping legal and insurance experts in the loop, before rejecting them on your own.
c. Risk Management
You may be able to manage risks better and effectively after thoroughly understanding the Hammer Clause as it encourages a strategic approach and aims to mitigate significant financial impacts.
If you are still unclear about what a Hammer Clause is and if it exists in your policy, consult an expert and review your policy thoroughly. As discussed above, this clause can significantly impact your claims, and understanding it thoroughly would help you make more informed decisions regarding settlements and protecting your assets.
At Professional Liability Insurance Group, we have experts who are ready to help you understand your policy better. Feel free to contact us, we are here to Protect You Better!
Call or Text us at 1 (877) PLIG-123
That’s 1 (877) 754-4123
