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What is DOL: Defense Outside of Limits in Business Insurance

Legal costs can quickly exhaust your policy limit leaving you to pay out of pocket for claims and settlement. In order to have protection against both claims and legal expenses, when purchasing or reviewing any of your business insurance policies, such as liability, professional, general, or product, you should determine whether the policy includes coverage for legal defense outside the limits or inside the limits of liability.

  • Defense inside the limit means that all defense costs (attorney’s fees, court costs, investigation, and filing legal papers) are deducted first from the policy limit, which cuts into the overall limit of dollars available to pay for monetary damages awarded by a ruling.
  • With defense outside the limit coverage, there are separate limits available for legal defense costs and court-awarded damages. So, the defense costs outside the limits don’t erode your policy limits available to pay settlements resulting from a suit.

This should not be overlooked because if your company is facing a lawsuit, the type of coverage you’ve selected is essential in determining your potential financial responsibility.