Deductible options on a Professional Liability policy for Design Professionals -

One of the factors to consider when reviewing Professional Liability quotes is not just the deductible amount but the deductible option.  What are the typical deductible options?

First dollar deductible:

First dollar deductible is also known as ‘damages only’ deductible.  Your firm is responsible for the damages only on a claim settlement.  For example, when a claim is opened there are claims expenses associated with the claim (attorney, expert witness, etc.).  If there is not a settlement with the claim then your firm will not be required to pay the deductible with first dollar deductible option.  Your firm only pays the deductible if there is a settlement agreement or your firm goes to trail and has to pay a judgment.

First dollar deductible is commonly available to small firms but it does depend on the insurance company, it may be available to mid sized firms as well.  The availability of the first dollar deductible option may also depend on the claims history of your firm.  The first dollar deductible is a richer benefit and will increase the premium slightly when offered.

Straight deductible:

The Straight deductible is also known as ‘damages and defense expense’ deductible.  Your firm is responsible for the defense costs up to the deductible as soon as claim is opened.  For example, the attorney expenses and expert witness expenses are your firms responsible up to the deductible amount.  If your firm has to pay a settlement and the deductible has not been met with the expenses then your firm is responsible for the balance of the deductible on the damages (settlement).

The Straight deductible is a common for larger firms or firms that have an adverse claims history.  With some carriers this is the only deductible option available.

As always, your PUI Agent is here to help with questions on the deductible options.  Please call or email with your firm questions.