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defense-only coverage

Defense-only coverage is liability insurance covering defense costs but not settlements or indemnity payments.

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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.