Deductive Reasoning

What is a deductible reduction policy enhancement?

By Amanda Juratovic

You are already aware that not all professional liability policies for insurance agents extend the same coverage benefits. However, an important coverage component has become increasingly valuable in the insurance agents’ professional liability marketplace: a deductible reduction feature. 

This coverage feature can vary significantly between carriers and even within a particular carrier’s policy depending on whether certain conditions are met. Due to these variances, it is important to pay close attention to the specific details of the coverage afforded under this enhancement.

In general, a deductible reduction incentive clause is a provision within professional liability policy forms which, if certain conditions are met, reduces the policy’s deductible by a specified percentage. Depending on the policy, agencies may qualify for a deductible reduction or even a deductible waiver—when an insured’s deductible is waived in its entirety—if they remain loss-free during a specified time, remain with a particular carrier during that timeframe, or maintain contemporaneous written documentation of any customer’s refusal to accept any type of coverage or limit offered by your agency. 

Because the actual percentage reduction of the deductible varies drastically by carrier once the specific conditions are met, close attention to these details is essential.

The deductible reduction feature adds value beyond just reducing or omitting responsibility for payment of a deductible—it incentivizes your agency to adhere closely to important risk management practices to help mitigate the chances of errors & omissions claims from happening.

If your agency receives a more competitive quote from another carrier that has more restrictive terms within this specific provision or lacks this coverage feature completely, it is important to assess the differences. 

Amanda Juratovic is assistant vice president of errors & omissions operations for the Big “I” Professional Liability Program. Learn more at independentagent.com/EO.
This article was originally printed in Independent Agent magazine. Reprinted with permission.