Deductible
Key Takeaway
The amount subtracted from a covered claim payment that the insured is responsible for paying. In malpractice insurance, deductibles typically apply per claim and may or may not include defense costs depending on the policy terms.
Definition
The amount subtracted from a covered claim payment that the insured is responsible for paying. In malpractice insurance, deductibles typically apply per claim and may or may not include defense costs depending on the policy terms. Higher deductibles result in lower premiums but increase out-of-pocket exposure on each claim.
Why This Matters for Law Firms
This term defines the boundaries of what your insurance will and will not pay for. Law firms that misunderstand coverage terms risk discovering gaps in protection only after a claim has been filed, when it is too late to remedy the situation. Reviewing these terms with your broker before binding coverage is a critical risk management step.
Example Usage in Context
During a coverage review meeting, the firm administrator might note: "Our policy includes a deductible provision -- let's make sure we understand exactly what that means for our specific practice areas before we sign off on the renewal."
Related Q&A
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