The Montana Commissioner of Securities and Insurance issued an advisory memorandum on the allowable uses of defense within limits (DWL) provisions according to the Montana Insurance Code.
A defense within limits provision is where the amount paid by the insurer to defend the insured against a suit or claim reduces the policy's total limit.
Defense within limits or comparable provisions are not allowed in personal insurance policies. The Commissioner will not approve any personal insurance form that contains a DWL provision or similar provision that limits coverage for defense costs.
DWL or related provisions are permitted for commercial policies, but the form must clearly communicate the inclusion of the provision and explain what it means. Disclosure of the provision should be on the first page of the declaration page and policy application, and include the following message:
"DEFENSE WITHIN LIMITS: The amount of money available under the policy to pay settlements or judgments will be reduced and may be exhausted by defense expenses, including but not limited to fees paid to attorneys to defend you."