Compare two professional liability policy deductible options using annual premium, deductible amount, and your own probability of a covered claim. The calculator estimates premium savings, added retained exposure, probability-weighted annual cost, and the claim probability at which both options have the same expected cost. It is a planning comparison only; policy wording, defense-cost treatment, exclusions, and cash-flow tolerance can change the practical choice.
Expected annual cost = annual premium + (deductible × annual claim probability)
Break-even probability = (lower-option premium − higher-option premium) ÷ (higher deductible − lower deductible).
The main result is the smaller probability-weighted annual cost among the two options. It balances certain premium cost with the modeled deductible exposure from one covered claim.
Insurance terms vary. This estimate assumes at most one deductible-bearing claim in the year and does not model claim severity, defense-cost treatment, exclusions, taxes, or multiple claims.
Option A costs $5,200 with a $2,500 deductible. Option B costs $4,100 with a $10,000 deductible, and the assumed annual claim probability is 8%.
A: $5,200 + $2,500 × 0.08 = $5,400
B: $4,100 + $10,000 × 0.08 = $4,900
Option B is lower by $500 in expected annual cost. The break-even probability is $1,100 ÷ $7,500 = 14.67%.
Yes. The expected annual out-of-pocket amount multiplies the deductible exposure by the claim probability you enter.
A premium saving may be smaller than the added expected deductible exposure, especially when the assumed claim probability is high.
Only if your policy applies the deductible to defense costs. Check the policy wording and model the amount that actually applies.
Run the calculator again for each additional quote while keeping the coverage terms and claim assumption consistent.
No. Cash-flow capacity, coverage exclusions, limits, insurer terms, and risk tolerance also matter.
| Variable | Meaning |
|---|---|
| Premium | Certain annual policy cost |
| Deductible | Retained amount per modeled covered claim |
| Claim probability | User-supplied annual scenario rate |
| Break-even | Probability where modeled expected costs match |