Professional Liability Insurance
How Do Professional Liability Deductibles Work?
PL deductibles often apply to both defense costs and damages — not just settlements. This means legal defense fees count against your deductible before the insurer starts paying.
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How do deductibles work on professional liability insurance?
Unlike auto or property insurance where the deductible applies only to the settlement, many PL policies apply the deductible to both defense costs and damages combined. On a $10,000 deductible policy, the insurer may not engage until your share of defense costs reaches $10,000.
Common deductibles range from $2,500 to $25,000. Smaller contractors typically choose $2,500–$5,000. Larger firms may accept $10,000–$25,000 deductibles in exchange for materially lower premiums.
Some carriers offer ‘defense outside the deductible’ arrangements where legal fees don’t erode the deductible — only settlements count. This structure is often preferable for contractors who want the insurer engaged from day one of a claim.
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