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defense costs endorsements

Defense costs endorsements are nonstandard commercial general liability (CGL) endorsements stating that if the insurer agrees to provide a defense to an insured, but it is later determined that the claim would not be covered by the policy, the insurer is entitled to reimbursement of defense costs incurred up to that point.

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The endorsement is intended to comply with court rulings in some states that the insurer's right to reimbursement must be preserved in the language of the insurance policy. Some of the endorsements require the insurer to give written notice that coverage may not apply (a reservation of rights letter) and of the insurer's intent to seek reimbursement of defense costs in the event the claim is determined to not be covered.