Insurance brokers and insurers often refer to the limit of indemnity under a policy being costs inclusive, but what does costs inclusive mean and what effect does it have upon the level of protection provided by your insurance policy?
‘Costs Inclusive’ is term used by liability insurers denoting that cover for defence costs is included in the limit of indemnity. ‘Costs in Addition’ denotes that cover for defence costs is in addition to the limit of indemnity.
General Public Liability tends to pay defence costs in addition to the limit of indemnity, but can be restricted to costs inclusive for certain higher risk activities, e.g. USA/Canada activities.
Employers” Liability is costs inclusive as standard.
Professional Indemnity insurance has a mixture of costs in addition and costs inclusive contracts.
Third Party costs are always included within the limit of indemnity as third party payments.