What are defense costs in insurance and are they paid separately from the limit of liability? What is post-judgment interest?
Defense Costs in insurance mean any type of fees, costs, and expenses incurred by or on behalf of the insurance holder in the investigation, defense, adjustment, settlement, or appeal of any Claim. These expenses can be 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.
There are two ways to pay Defense Cost
- Defense outside the limits
- Defense within the limits
Defense outside the limits
Defense costs outside the limits mean that the insured person has separate limits or even unlimited funds available for defense in addition to the limits of liability on your insurance policy. So these will not cut from the existing policy liabilities.
Defense within the limits
Defense within the limits means that in case your insurance company has to defend you or your company from a claim, all legal, investigative, defense, and appeal expenses incurred will be cut from your limits of liability.
Post Judgment means if the insured claim for the policy is successful and the court gave the order that says the Insured is owed money, the post-judgment interest starts accumulating automatically on the amount Insured is owed, starting on the date when the court makes the order and ending on the date insured receive payment. This interest is intended to cover the loss of the use of the money the insured would have had if the insured received payment the day the judgment was made.