Arkansas Insurance Adjuster Practice Exam

The 'Consent to Settle' clause in the Professional Liability policy is best described as:

1. a clause that requires the insured's approval before the insurance company discusses settlement options with a claimant

2. a clause that requires the insurance company to get approval from the insured before settling a claim

3. a clause that requires the insured to get the consent of the insurer prior to settlement

4. a clause that requires the insurance company to settle all claims

The correct answer is: a clause that requires the insurance company to get approval from the insured before settling a claim

The 'Consent to Settle' clause in the Professional Liability policy ensures that the insurance company cannot settle a claim without getting approval from the insured first. Option A is incorrect because the insured's approval is required before the insurance company discusses settlement options with a claimant, not simply before settling. Option C is incorrect because it puts the responsibility of obtaining consent on the insured, rather than the insurance company. Option D is incorrect because it is not feasible for an insurance company to settle all claims, and this would not be a reasonable expectation for the insured. Therefore, option B is the best description of the 'Consent to Settle' clause in the policy.