A provision found in most professional liability insurance policies providing
that the expenditure of defense costs associated with a claim reduces policy
limits. This approach contrasts with that used in commercial general liability
(CGL) policies, in which defense costs are paid in addition to policy limits.
(Shrinking limits provisions are also known as defense within limits provisions.)
Accordingly, limits under professional liability policies must be selected so
that they will be adequate to cover not only projected settlement/indemnity
costs but expected defense expenses as well.
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