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:

• Insured selects First Dollar Defense as a coverage option on their policy
• Insured is named in a lawsuit for a structural defect on a building
• Since they have First Dollar Defense, insured does not have to pay a deductible to initiate coverage
• Insurance company defends insured
• Court decision favors insured and there is no indemnity payout
• Insured does not have to pay deductible

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. 

Jason Matison
Commercial Insurance Agent
Austin, Texas

​As a business owner, it’s possible you make decisions every day that can come back to bite you. You may not think so, but in this day of litigiousness, your business may be at risk.  A type of Business Insurance to manage your risk is management liability insurance.  Depending on your business, in addition to having General Liability Insurance, having Professional Liability Insurance is not just good business, it is as necessary as heat and lighting for your office.  Statutes, federal, and state laws change on a regular basis, so it is important that your company protect its assets with management or professional liability insurance. For example, if you are an Engineer, Certified Public Accountant (CPA), or in any type of field giving advice or service, you should consider professional liability insurance for your business.
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Some things to Consider

• General Liability Insurance does not cover the risks of Employment Liability, Professional Liability, or Directors and Officers Liability.  You need a separate insurance policy to cover these risks.

 

• Defense costs are going up at a rapid rate. Management liability insurance can provide needed defense coverage, even if you are not liable (yes, even if you are not held liable). You still have to go to court.

 

• Company owners can be held personally liable for their actions as well as the actions of other managers or executives. It is imperative to put coverage in place for protection.

 

• Twenty five percent of private firms have had some sort of employment issue that could not be resolved without legal counsel involvement.  The average defense costs are $250 per hour. These costs can add up. You also have to consider finding the right law firm, which can take time.

 

• Many businesses fail to purchase Cyber Insurance. According to Adam Hewitt, senior vice president of INSUREtrust, “Cyber risk is the fastest-growing segment in the commercial liability insurance industry -- increasing at an annual rate of 30 percent”. The average cost of each compromised record is around $175.00. Most states have laws requiring notification if you have had an incident. If you are collecting personal data, it is your responsibility. The judge/court probably isn’t going to want to hear, it’s stored in the cloud.

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If you have any questions about management liability insurance or any other type of Business Insurance, please let me know. We are located in Austin, TX and would be happy to meet with you to answer any questions and provide you with a quote. Once you have had a chance to review coverage and pricing, then you can make an informed decision.