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 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 liability and other types
of professional liability policies also provide defense-only coverage to allegations
of intentional or illegal conduct by the insured.