Understanding First Dollar Defense

For directors and officers for public companies, everyday decisions affect employees and customers alike. Should anything go awry with how the company is functioning, blame often first goes to those responsible for running the company. Having the proper defense for any kind of lawsuit is vital. The proper insurance coverage can make the financial strain on a public company a little easier. One type of coverage you may be able to choose is First Dollar Defense versus a Straight Deductible.


First Dollar vs. Straight Deductible


At a glance, First Dollar Defense often comes at a higher premium than a Straight Deductible. However, if you are in a business that may be subject to claims that are unfounded or just nuisances, First Dollar Defense may be a viable option. Under First Dollar, your deductible tends to only apply to damages or settlement. In Straight Deductible, the deductible applies to both the cost of defense and damages. With First Dollar, if you have an unfounded claim and do not pay damages, you keep your deductible. With Straight Deductible, even when you pay no damages, you still pay the deductible.


Which is the Best?


It’s up to directors and officers for Public Companies to determine which is best. For nuisance or unfounded claims, First Dollar Defense is likely the better option. Consult with your insurance agent to see if your company could benefit from First Dollar Defense.