The Importance of a Consent-to-Settlement Clause

If you’ve ever evaluated a medical malpractice insurance policy, you might have noticed the many clauses it can contain. Insurance policies have many clauses and provisions with different definitions and meanings that not everyone fully understands—like the consent-to-settlement clause. In our guide, we’ll explain a consent-to-settlement clause, its importance, and why you may want to consider it for your insurance policy.

What Is a Consent-to-Settlement Clause?

A consent-to-settle provision is an additional clause sometimes found in professional or medical practice liability insurance that empowers the insured in settlement situations. Typically, an insurer can settle with a claimant without the insured’s express permission, and there’s not much the insured can do about it.

The consent-to-settle clause allows the defendant to reject a settlement and fight a claim if they believe it is unreasonable and think the settlement could be a black mark on their career and reputation. This clause is included in most professional liability policies but is not a guarantee—if you’re unsure about your specific policy, double-check the policy paperwork or contact your insurance agent.

You might also know the consent-to-settlement clause as a hammer or blackmail settlement clause.

Do I Need a Consent-to-Settle Clause in My Policy?

Does everyone need a consent-to-settle clause? Whether someone feels they need this clause is entirely up to the individual. Still, a consent-to-settlement clause is very important for many people, especially doctors and medical professionals. A consent-to-settle clause allows the individual to take matters into their own hands if they see fit—after all, it is their name and reputation on the settlement.

A consent-to-settle clause is not essential to most people, but some prefer the added control it gives them as the insured party. Ideally, the insured would never have to use their malpractice insurance or activate the consent-to-settle clause to decline a settlement.

The Pros & Cons of a Consent-to-Settle Clause

The consent-to-settle clause gives the insured more control, which can also be a double-edged sword. While an individual may want more control of something as important as a malpractice settlement, they’re likely not as experienced or knowledgeable regarding settlements or the malpractice claim process to make an uninformed decision.

Insurers are experts in settlements, and if they think a settlement is a good offer, they’re likely correct. It’s not unheard of for the insured to use the clause to reject a settlement, lose in court, and pay an even greater sum than the previously agreed settlement.

How do malpractice claims affect careers? The consent-to-settlement clause can help expediate claims since some trials can go on for a long time.

We hope our brief guide has been illuminating and helpful for those looking to learn more about liability insurance and consent-to-settle provisions. If you have further questions, don’t hesitate to contact our expert staff at Baxter & Associates. You can also browse our blogs to learn more about consent-to-settle loss and the stages of a medical malpractice case.

Does Malpractice Insurance Cover Defense Costs?

There’s a lot of discrepancy between what’s covered under one malpractice policy and another and how much is covered in damages and costs. Below, we’ll explain some of the basics of malpractice insurance and whether it typically covers defense costs for defendants.

Malpractice Insurance Typically Pays for Defense Costs

In almost all cases, a malpractice insurance policy will cover the expenses that come from the defense of your case. Defense expenses are typically one of the core elements of malpractice insurance, as well as:

  • Attorney fees
  • Arbitration costs
  • Court costs
  • Settlement costs
  • Compensatory damages
  • Medical damages

While not every malpractice insurance policy is the same, and there can be quite a difference in what’s covered from one policy to another, defense costs are typically part of most policies.

Do Defense Costs Count Toward the Policy Limit?

Defense costs are covered in most policies, but another aspect to consider is whether that coverage is inside or outside the policy’s limits. The cost limit for a policy is a cap for how much the insurance provider will pay to resolve the claim.

Some malpractice insurance policies include the defense costs in the policy limits, while others make them separate and reserve the policy limits only for paying damages or settlements. In most cases, policy limits are for damages only, and defense costs are separate, but this is not something you should assume. Making such assumptions could dramatically affect how much you’d be responsible for personally paying in damages.

Does Malpractice Insurance Cover Punitive Damages?

Another question that many should consider is whether their malpractice policy covers punitive damages along with compensatory damages. Compensatory damages are rewarded to replace monetary losses and expenses of the plaintiff, while punitive damages are meant to penalize the defendant beyond the compensation rewarded.

But there’s a lot of variance in punitive damages coverage because there’s such a wide discrepancy in punitive damages from state to state. In some states, punitive damages are only reserved for specific situations and are capped at a certain amount, while in other states, they’re much more common. Whether malpractice insurance covers punitive damages will depend largely on local laws and restrictions.


Navigating all the ins and outs of malpractice insurance can be challenging. Baxter & Associates aims to be a malpractice insurance agency that is approachable and helpful to people who want to ensure they’re protected should they come under scrutiny. Contact our helpful staff if you want to learn more about malpractice insurance or find a policy that fits your needs.