Purpose
The Claims-Made Coverage Position letter addresses the unique triggers and conditions of professional-liability policies: claim-first-made, notice-of-circumstance, prior-acts retroactive date, and consent-to- settle / hammer-clause provisions.
When to Send
Send after the insured reports a claim or a potential claim under a claims-made policy, once the insurer has confirmed the policy period and retroactive date but before defense counsel is appointed or settlement discussions begin.
Required Components
1. Claim / Circumstance Facts
Identify the matter ({{claim_number}}), the insured professional ({{insured_name}}), the claimant or aggrieved party, the alleged act / error / omission, and the date(s) the insured first became aware.
2. Policy Trigger Analysis
Cite the policy ({{policy_number}}) claims-made insuring agreement, retroactive date, extended-reporting provision (if any), and the notice condition. Confirm whether the matter qualifies as a "claim" or a "circumstance that may give rise to a claim."
3. Defense & Consent-to-Settle Mechanics
Explain the insurer's right and duty to defend, the consent-to-settle (hammer-clause) provision, and the effect of the insured withholding consent. Confirm panel counsel assignment or request the insured's counsel preference from the approved list.
4. Prior Acts & Retroactive-Date Reservation
Reserve rights on any portion of the claim arising from acts, errors, or omissions before the retroactive date; from prior-known circumstances not disclosed in the application; or from any matter barred by another exclusion (criminal / dishonest acts, assumed contractual liability, bodily injury, disciplinary proceedings).
5. Disciplinary / Regulatory Overlay
If applicable (attorneys, physicians, advisers, architects, accountants), address the scope of licensing-board or regulatory-defense coverage and any sub-limit or separate retention.
Jurisdiction Notes
Universal
Claims-made trigger rules and consent-to-settle enforceability vary by state. A handful of jurisdictions have narrowed hammer-clause application as a matter of public policy. Confirm controlling state law before applying the consent provision to any proposed settlement.
Adjuster Guidance
- Resolve the "claim vs. circumstance" question early — a misfiled
- Preserve the retroactive date as a coverage boundary; require a
- Document hammer-clause discussions in writing; oral waivers of consent
- Coordinate with defense counsel on any regulatory or disciplinary
