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Defense-within-Limits policies encourage insurers and policyholders to keep an eye on expenses to ensure a best-case outcome.

Most liability insurance contracts treat defense expenses as outside the policy limit. Such is not the case in defense-within-limits (DWL) policies, though. Detractors call them wasting, cannibalizing or self-liquidating policies since defense fees can consume the policy limit. DWL policies appear prominently in D&O coverage, legal and medical malpractice policies and now in some commercial general liability policies.

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