deductible options

Deductible Options

What are deductible options on Professional Liability policies for Design Professionals? There are different deductible options with insurance companies.  They each have slightly different wording of first dollar deductible and straight deductibles.  Here are some examples of the deductible options.

First Dollar deductible

Example 1:

The Deductible obligation stated in Item 4. of the Declarations will apply to Damages only and will not apply to Claim Expenses. The Deductible will apply to Damages only and will not apply to Claim Expenses. The Deductible applies separately to each Claim whether this insurance is primary or excess.

Furthermore, the Deductible will apply as follows:

(i) The Deductible for each Claim is the most the Insured must pay as a Deductible for Damages arising out of any single Claim.

(ii) The aggregate Deductible, if any, is the most the insured must pay as a Deductible for all Claim(s) first made and first reported during each Policy Year.

Example 2:

The Insured’s obligation to pay up to the per claim Deductible amount shown on the Declarations and the aggregate Deductible per policy year shown on the Declarations, if any, including but not limited to claim expenses, shall apply to all Insuring Agreements and Supplemental Insuring Agreements under the Section of the Policy entitled COVERAGE; provided, however, such Deductibles do not apply to claim expenses.

Straight deductible

Example 1:

Subject to Section II.C.ii. below, the deductible amount shown in Item 5.A. of the

Declarations is the Insured’s deductible obligation for each claim and applies to

the payment of damages and claim expenses. The deductible will be paid by the Named Insured. The limits of liability set forth in the Declarations are in addition to, and excess of, the deductible.

Example 2:

If ITEM 5 of the Declarations indicates that a Deductible applies for all Claims, the Insured’s obligation to pay Damages and Defense Expenses, for all Claims made during each Policy Year will not exceed the Deductible amount for all Claims set forth in ITEM 5 of the Declarations. If there is no Deductible amount shown for all Claims, the first Named Insured will be responsible for the each Claim amount for each and every Claim, without further limitation regardless of how often it applies.

Your firm will need to make a decision at renewal time of your policy on the deductible option you would like to have.  It is an important decision in the event of a claim so be sure you discuss the options with your PUI Agent.