{
  "id": "clause-hammer-clause",
  "type": "clause",
  "languages": {
    "en": {
      "id": "clause-hammer-clause",
      "lang": "en",
      "type": "clause",
      "title": "Hammer Clause",
      "shortDefinition": "The hammer clause caps the insurer's liability at the settlement amount it recommended, plus defence costs incurred up to that point, where the insured rejects a settlement the insurer regards as reasonable.",
      "synonyms": [
        "Blackmail Settlement Clause",
        "Consent to Settlement Clause"
      ],
      "linesOfBusiness": [
        "D&O insurance",
        "Professional indemnity insurance"
      ],
      "jurisdictions": [
        "US"
      ],
      "tags": [
        "D&O",
        "US market",
        "Claims Handling"
      ],
      "relations": {
        "relatedTerms": [],
        "partOf": [],
        "appliesTo": [
          "cov-do",
          "cov-berufshaftpflicht"
        ],
        "regulatedBy": [],
        "relevantFor": [],
        "insurableVia": [],
        "mitigatedBy": [],
        "comprises": [],
        "alternativeTo": [],
        "complementedBy": []
      },
      "attribute": null,
      "profile": null,
      "coverageProfile": null,
      "clause": {
        "kind": "condition",
        "origin": "us-market",
        "favours": "insurer",
        "negotiability": "negotiable",
        "standardWordings": []
      },
      "legalBasis": [],
      "standards": [],
      "reviewStatus": "expert-reviewed",
      "reviewedBy": "Guido Hesse, Hesse Group Holding AG",
      "lastReviewed": "2026-09-04",
      "version": "0.1.0",
      "updated": "2026-09-03",
      "generated": {
        "by": "cursor-agent/claude-sonnet-5",
        "at": "2026-09-03T00:00:00.000Z"
      },
      "verified": [
        {
          "by": "human:ghesse",
          "at": "2026-09-04T00:00:00.000Z",
          "method": null
        }
      ],
      "staleAfter": null,
      "url": "https://hgh.ch/lexikon/en/knowledge/clause/hammer-clause/",
      "alternateUrl": "https://hgh.ch/lexikon/de/wissen/klausel/hammer-klausel/",
      "body": "## Purpose\n\nUnder policies granting a consent-to-settle right, the insured can reject a settlement proposed by the insurer and insist on judicial determination instead. Without a counterweight, this veto right would strip the insurer of all cost control: the insured could refuse every settlement without bearing any financial risk itself. The hammer clause — also known as the \"blackmail settlement clause\" — creates that counterweight by placing the consequences of a refusal on the insured.\n\n## Effect and limits\n\nUnder a full (\"hard\") hammer clause, rejecting a proposed settlement caps the insurer's liability at the proposed settlement amount plus defence costs incurred up to the point of refusal; all further costs — additional defence, a higher settlement, or a judgment — fall solely on the insured. The \"soft\" or \"coinsurance\" variant instead splits these additional costs proportionally between insurer and insured, commonly in a ratio of 50/50 up to 80/20 in the insurer's favour. The clause is found mainly in professional indemnity, D&O and employment practices liability policies where the insured has a say in settlement decisions.\n\n## Negotiation and practice\n\nInsureds should actively seek a soft rather than a hard hammer clause, as this materially reduces the financial risk of a well-founded refusal. The clause is particularly relevant in employment practices liability and D&O cover, where settlements are frequently rejected for reputational reasons even though they would make sound insurance sense."
    },
    "de": {
      "id": "clause-hammer-clause",
      "lang": "de",
      "type": "clause",
      "title": "Hammer Clause",
      "shortDefinition": "Die Hammer Clause begrenzt die Leistungspflicht des Versicherers auf den vom Versicherer empfohlenen Vergleichsbetrag zuzüglich bis dahin angefallener Verteidigungskosten, wenn der Versicherte einen vom Versicherer für angemessen gehaltenen Vergleich ablehnt.",
      "synonyms": [
        "Blackmail Settlement Clause",
        "Consent to Settlement Clause"
      ],
      "linesOfBusiness": [
        "D&O-Versicherung",
        "Berufshaftpflichtversicherung"
      ],
      "jurisdictions": [
        "US"
      ],
      "tags": [
        "D&O",
        "US-Markt",
        "Schadenregulierung"
      ],
      "relations": {
        "relatedTerms": [],
        "partOf": [],
        "appliesTo": [
          "cov-do",
          "cov-berufshaftpflicht"
        ],
        "regulatedBy": [],
        "relevantFor": [],
        "insurableVia": [],
        "mitigatedBy": [],
        "comprises": [],
        "alternativeTo": [],
        "complementedBy": []
      },
      "attribute": null,
      "profile": null,
      "coverageProfile": null,
      "clause": {
        "kind": "condition",
        "origin": "us-market",
        "favours": "insurer",
        "negotiability": "negotiable",
        "standardWordings": []
      },
      "legalBasis": [],
      "standards": [],
      "reviewStatus": "expert-reviewed",
      "reviewedBy": "Guido Hesse, Hesse Group Holding AG",
      "lastReviewed": "2026-09-04",
      "version": "0.1.0",
      "updated": "2026-09-03",
      "generated": {
        "by": "cursor-agent/claude-sonnet-5",
        "at": "2026-09-03T00:00:00.000Z"
      },
      "verified": [
        {
          "by": "human:ghesse",
          "at": "2026-09-04T00:00:00.000Z",
          "method": null
        }
      ],
      "staleAfter": null,
      "url": "https://hgh.ch/lexikon/de/wissen/klausel/hammer-klausel/",
      "alternateUrl": "https://hgh.ch/lexikon/en/knowledge/clause/hammer-clause/",
      "body": "## Zweck\n\nIn Policen mit Consent-to-Settle-Recht kann der Versicherte einen vom Versicherer vorgeschlagenen Vergleich ablehnen und auf einer gerichtlichen Klärung bestehen. Ohne Gegengewicht würde dieses Vetorecht dem Versicherer jede Kostenkontrolle entziehen: Der Versicherte könnte jeden Vergleich verweigern, ohne selbst ein finanzielles Risiko zu tragen. Die Hammer Clause – auch «Blackmail Settlement Clause» genannt – schafft dieses Gegengewicht, indem sie die Konsequenzen einer Ablehnung dem Versicherten auferlegt.\n\n## Wirkung und Grenzen\n\nBei der vollen («harten») Hammer Clause deckelt die Ablehnung eines Vergleichsvorschlags die Leistungspflicht des Versicherers auf den vorgeschlagenen Vergleichsbetrag zuzüglich der bis zum Ablehnungszeitpunkt angefallenen Verteidigungskosten; alle danach entstehenden Kosten – weitere Verteidigung, höherer Vergleich oder Urteil – trägt allein der Versicherte. Die «weiche» Variante («Soft» oder «Coinsurance Hammer Clause») teilt diese Mehrkosten stattdessen quotal zwischen Versicherer und Versichertem, marktüblich im Verhältnis 50/50 bis 80/20 zugunsten des Versicherers. Die Klausel findet sich vor allem in Berufshaftpflicht-, D&O- und Employment-Practices-Liability-Policen, in denen der Versicherte ein Mitspracherecht bei Vergleichen hat.\n\n## Verhandlung und Praxis\n\nVersicherte sollten aktiv eine weiche statt einer harten Hammer Clause anstreben, da diese das finanzielle Risiko einer begründeten Ablehnung erheblich mindert. Besonders relevant ist die Klausel bei Employment-Practices-Liability- und D&O-Deckungen, wo Vergleiche häufig aus Reputationsgründen abgelehnt werden, obwohl sie versicherungstechnisch sinnvoll wären."
    }
  }
}