First Dollar Defense (FDD) is probably not a coverage option or term you've heard of before when it comes to Business Insurance, but it's one that you should definitely be aware of. Especially if you are a design professional, such as an Engineer or Architect (see Insurance for Engineers). First Dollar Defense is actually a coverage option that can be added to your Professional Liability (E&O) policy for an additional premium. You might also hear this coverage called Dollar One Defense.
Typically the insured must pay a deductible for the insurance company to start defending them (this is referred to as Straight Deductible). With First Dollar Defense, the insured does not have to pay a deductible unless the insurance company commits to damages/indemnity payout.
So, here's an example of how this coverage option would work:
Conversely, if the court finds the insured at fault, and damages are paid, the insured would pay a deductible.
If you have any questions about First Dollar Defense, or any other Business Insurance question, please let me know. We are always happy to help.
Commercial Insurance Agent
A Professional Liability Update