DEDUCTIBLE

When does my firm have to pay a deductible on a Professional Liability claim?

This will all depend on what type of deductible your design firm has a how much the deductible is.  The deductible amount and type are set when you bind the policy with an insurance company.

If your firm has a $0 deductible then you do not pay a deductible at any time on a claim.  This is common for small firms and will also depend on the insurance company your firm is insured with.

Your firm may have a first dollar defense deductible.  In this case your firm will not be responsible to pay a deductible unless there is an actual claim settlement.  If there is not a settlement on the claim and just claims expenses your firm will not have to pay a deductible.  If there is a claim settlement then your firm will be required to pay the deductible at the time of the settlement.

Your firm may have a straight deductible on your Professional Liability policy.  If this is the deductible type your firm has in place then you will pay the deductible as soon as a claim is opened.  There will be a claims expense that start as soon as a claim is open, that is when your firm will pay the deductible.  Regardless if there is a claim settlement or not your firm will be required to pay the deductible.  For example, if the claim doesn’t have a settlement and there are only claims expenses of $4,000 and your deductible is $5,000, then your firm will pay the $4,000.  If there is a settlement that is $30,000, then your firm will pay the $5,000 deductible.

Discuss the deductible and deductible type with your agent when you bind your policy so you understand how it will work if/when your firm has a claim.  If your firm does have a question about deductible or deductible types call or email your Professional Underwriters agent.

Click HERE for the definition of deductible.