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Connecticut Regulates ‘Defense Within Limits’ Provisions by Insurers

September 29, 2022

Connecticut’s insurance regulator has provided commercial insurers with updated guidance on “defense within limits” policy provisions including the lines of insurance on which they may be included and the consumer disclosure required.

The guidance from the Connecticut Insurance Department (CID) identifies the lines where a “defense within limits” (DWL) provision is permissible and the disclosure that insurers should make to insureds purchasing policies with a DWL provision.

DWL provisions generally provide that legal defense costs incurred by an insurer in defending an insured against a claim will be set off against the policy’s liability coverage limit. These provisions are traditionally offered in connection with claims-made policies and help reduce premium costs to insureds.

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