Defense Costs

Published: | Updated: August 15, 2016

Definition - What does Defense Costs mean?

Defense costs refer to all the costs of defending against a lawsuit. These expenses include the cost of hiring a lawyer, court fees, investigations, gathering facts, filing legal paperwork, and other related costs. In terms of insurance, various liability insurance policies cover these expenses.

Insuranceopedia explains Defense Costs

A liability insurance policy may offer defense cost coverage in one of two ways: It may be included as part of the liability limit or as a separate limit.

For instance, imagine that policy A and B both offer liability limits of $100,000, but policy B covers defense costs separately. Following a lawsuit, the policyholder must pay $125,000 total, with $100,000 in damages and $25,000 in defense costs. Policy A would only cover $100,000 and leave the policyholder responsible for the remaining $25,000, while policy B would cover $100,000 and the defense costs up to the coverage limits.

How Well Do You Know Your Life Insurance?

The more you know about life insurance, the better prepared you are to find the best coverage for you.

Whether you're just starting to look into life insurance coverage or you've carried a policy for years, there's always something to learn.

Share this: