nonparticipation settlement clause

A nonparticipation settlement clause refers to a provision in professional liability policies that gives the insurer the right to settle claims against insureds—for any amount the insurer deems appropriate—without first consulting the insured.

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Such provisions are unfavorable, and only a minority of insurers use this approach. In contrast, most professional liability insurers' forms reserve for the insured the right to approve settlement amounts to claimants.