What does Defense Only Coverage mean? Read on to discover the definition & meaning of the term Defense Only Coverage - to help you better understand the language used in insurance policies.
Defense Only Coverage
Liability insurance covering defense costs but not settlements or indemnity payments. Defense-only policies are best suited to insureds having effective loss control programs and a willingness to defend, rather than settle, claims made against them. Such coverage is most commonly (although not exclusively) used to cover defense costs associated with employment practices liability (EPL) claims, in which defense payments represent the majority of claim-related costs. One drawback of defense-only policies is that they subject an insured to potentially large uninsured judgments. Directors and officers (D&O) liability and other types of professional liability policies also provide defense-only coverage to allegations of intentional or illegal conduct by the insured.
We hope the you have a better understanding of the meaning of Defense Only Coverage.