Know the coverage being offered and don’t let price take precedence over proper coverage.
So many people will only look at price when it comes to insurance but those people usually haven’t experienced the claim that changed their life. You may have already heard about the Missouri lawsuit that was filed against a hospital and neurosurgeon for allegedly operating on the wrong side of a woman’s skull and brain. It is a very unfortunate story. You might ask “who could ever do that?” There was no intent to harm, and it turns out this is just a very unfortunate mistake made by the doctor. It happens – not always as serious as this – but it happens.
Your physician client may never actually perform a surgery incorrectly or make another type of medical error, but possibly they will be blamed as if they did – this is the time when they need to be defended against it and when they do, they do not want the consent to settlement or more commonly known as the hammer clause included in their policy – it’s often added just to save a few bucks.
The hammer clause is typically buried in a liability policy and anyone who is not familiar with this will most likely overlook it. Of course the premium will probably look like the one of the best deals they’ve seen. In general, the hammer clause states that if an insured withholds consent to settle, the insured will have to pay out of their own pocket any judgment in excess of the proposed settlement amount. In the end, the insurance company saves money by cutting short the litigation process and reducing the insured’s ability to say no to a settlement offer. Be aware and don’t get nailed with the “hammer”.
Consent to settlement clause: A provision (also known as the “hammer clause” and “blackmail settlement clause”) found in professional liability insurance policies that require an insurer to seek an insured’s approval prior to settling a claim for a specific amount. However, if the insured does not approve the recommended figure, the consent to settlement clause states that the insurer will not be liable for any additional monies required to settle the claim or for the defense costs that accrue from the point after the insurer makes the settlement recommendation.*
When reviewing a medical malpractice policy, there are many aspects of coverage to pay attention to but here a few quick tips:
• Make locating the hammer clause section a priority.
• Make note if a quote is significantly lower than another, it may be including the hammer clause
• Ensure the client is aware of the difference between the inclusion of the “hammer clause” and when it is excluded.
If you’re looking for a good deal, the best deal is having the proper coverage. Ensure proper coverage is in place for your client and avoid having a common claim change their life.
*Reference: Consent to Settlement Clause