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