Q: What does the term “Defense Costs Outside of Limits” mean?
A: Policies that have this language offer to cover your legal costs in addition to your policy limits. By way of example, should you have a $1,000,000 limit, and incur $250,000 of legal expenses fighting the suit—the carrier will still cover you for up to the $1,000,000 policy limit for any award or settlement, in addition to the legal costs.
Without this, in this example, your remaining loss coverage amount would be reduced by the $250,000 legal expenses leaving only $750,000 for loss coverage.
