When a valid claim is made, certain costs, referred to as claim expenses, begin to accrue. Claim expenses include attorneys' fees, court costs, and all other charges incurred by the insurer in defending a claim. If your professional liability policy has the standard Claim Expense Inside the Limit (CEIL), all claim expenses are deducted first from the per claim liability limit and the balance is available for settling a judgment, also known as an indemnity payout. For a small additional fee, Claim Expense Outside the Limit (CEOL) can be added to the policy. CEOL provides the insured with a separate limit of liability (equal to the per claim limit chosen), which is dedicated solely to claim expenses.

Example: An insured has a $1,000,000 per claim liability limit. A claim arises and the claim expenses total $400,000. If the standard CEIL coverage is in place, there is $600,000 available for a potential indemnity payout. If the insured added CEOL coverage to the policy, the full $1,000,000 would be available for a potential indemnity payout.