Understanding the Deductible on Professional Liability for Architects/Engineers

It is important to understand what a deductible is on Professional Liability.  The deductible is your firm’s obligation to pay per claim in the policy year as described in your firms Professional Liability policy.

The deductible may vary with amounts from $0 to $100,000 depending on the size of your firm and the insurance company your firm is insured with.  There will be a per-claim deductible on the policy and the insurance company you are insured with may also offer an aggregate deductible.  The aggregate deductible may be three times the per claim deductible or two times, again this will depend on the insurance company and your firm.  For example, the per-claim deductible is $10,000 and the aggregate deductible would be $30,000 for the three times deductible.

There are insurance companies that also offer a deductible credit for being claims free and longevity with an insurance company.  For example, your firm may have a $2,000 deductible and the insurance company is providing a deductible credit of $500.  Your firm, since you have the deductible credit, is responsible for the total deductible amount of $1,500.

There may also be deductible options with the insurance company your firm is with.  First dollar deductible option is your firm only pays the deductible if there is a claim settlement.  If there isn’t a claim settlement and the claim is closed then your firm doesn’t pay a deductible.  Another deductible type is straight deductible, in this case your firm pays the deductible as soon as the claim is opened and claims expenses begin.

There are portions of the insuring agreement that the deductible will not apply, these are things such as pre-claim and supplementary payments.  Your firm may also be eligible for a deductible credit with mediation or early resolution.

As always read your Professional Liability policy to understand your firm’s deductible and what that means for your firm in the event of a claim. Please call or email your Professional Underwriters agent with questions.