All professional indemnity policies will be subject to an excess or deductible (the word used will differ from policy to policy).
The excess/deductible can include the defence costs or be exclusive of defence costs.
There will normally be a reduction in the premium if the excess includes defence costs. For some professions, the insurer will specify that the excess includes defence costs.
At a practical level, the major difference between a cost inclusive excess or deductible and a costs exclusive excess or deductible is that in the event of a claim:
1. If the excess or deductible costs are exclusive, the client does not have to pay the excess if the claim is withdrawn or the claim is successfully defended
2. If the excess or deductible costs are inclusive, the client has to pay the excess as soon as the underwriter incurs defence or investigation costs. The amount of the excess is not refunded if the claim is successfully defended.