Generally speaking, when policyholders buy liability insurance, they are buying two categories of insurance coverage within the same insurance policy: (1) defense cost insurance coverage; and (2) indemnity insurance coverage (e.g., insurance coverage for settlements, judgments and other costs for claims brought against the policyholder). In many
instances, the value of the defense cost insurance coverage is just as great to the policyholder as the value of the indemnity insurance coverage.