Does the policy provide for interim payment of defense costs?
Traditionally, D&O and E&O policies are indemnity or reimbursement policies that do not impose a duty to defend on the insurer. Instead, the duty to defend lies with the insured, while the insurer has some delineated obligations regarding the reimbursement of defense expenses. Typically, the insured selects counsel subject to the insurer’s consent, which cannot be unreasonably withheld. In turn, the policies provide for coverage for defense costs by including defense costs (i.e., attorneys’ fees, expert fees and other litigation costs) within the definition of a covered loss. If the insured is entitled to coverage for a loss incurred in connection with the claims at issue, the insurer will reimburse the insured for the settlement or judgment and the costs incurred in defending the claim. However, the issue often arises as to when the insurer has a duty to reimburse payment of defense costs – as they are incurred or only when there is a judgment or settlement. The insurer may not be req
