Does Fiduciary Liability Cover Legal Defense?

The Travelers specimen includes defense expenses in the defined loss and says in its header that defense expenses are inside the limit. Its companion general terms impose retention and notice/consent conditions. Those are examples from specific forms, not a universal structure. The policy may distinguish a lawsuit from an informal inquiry, investigation, or request for documents, and may require insurer consent before incurring costs or settling.

Ask the insurer how defense counsel is selected, whether costs erode the limit, whether any separate defense limit applies, and when the retention must be paid. Check whether the policy advances expenses as they are incurred or reimburses later, and how it allocates costs when a complaint names insured and uninsured parties or covered and uncovered allegations. Follow the issued policy’s notice directions as soon as you receive a demand or proceeding.