Coinsurance hammer clause

{
  "id": "MLC-T-INS-000806",
  "term": "Coinsurance hammer clause",
  "field": "Insurance and risk management",
  "definition": "A provision in some liability insurance policies that penalizes the insured if they refuse to consent to a settlement offer that the insurer deems reasonable. If the insured rejects the offer and a subsequent judgment exceeds the proposed settlement, the insured may be responsible for the difference between the judgment and the settlement offer, or a portion thereof. This clause encourages settlement to limit the insurer's exposure.",
  "url": "https://mlchart.com/terminology/insurance/coinsurance-hammer-clause/"
}