Glossary
Hammer clause
A consent-to-settle provision limiting the carrier’s payout to what a claim could have settled for if you refuse the recommended settlement —…
What is hammer clause?
A consent-to-settle provision limiting the carrier’s payout to what a claim could have settled for if you refuse the recommended settlement — you keep control, but you own the excess risk.
Why it matters
If you refuse a settlement the carrier recommends, a hammer clause caps their payout at what settlement would have cost — everything beyond that is yours. Softened versions split the excess. It is one of the few clauses worth negotiating on principle.