All businesses need strong insurance protection in the event that a claim is filed against them. Aspects of claims settlement that all businesses should be aware of include hammer clauses, which can impact the amount that a business can receive in a settlement.

What is a Hammer Clause?

A hammer clause is a part of an insurance policy that gives the insurer some say in a settlement claim. Under a hammer clause, the insurance company can require the insured company to make a settlement on a claim.

How Can a Hammer Clause be Used?

Hammer clauses are used to cap the amount of money—including legal and other fees—that the insurance company is willing to pay. This can halt the legal process and require the insured business to accept a settlement or pay out of pocket for future expenses related to the claim.

If your business is involved in a claims case, you will likely rely on your insurance company to help pay for fees related to the claim. It is important to be aware of whether your insurer makes use of hammer clauses, as this may affect how you proceed with your case. In all situations, it is important to have good protection and a good relationship with your insurer in order to give you and your business peace of mind.