What might happen in the absence of "defense costs" in a liability policy?

When a liability policy does not cover "defense costs," it can lead to significant financial losses for a business. In liability situations, defense costs are the expenses incurred in defending against claims made by third parties, such as attorney fees, court costs, and other related legal expenses. If a policy does not include these costs, the business will need to pay for these expenses out of pocket.

This could strain the company's finances, especially if multiple claims arise or if the legal process is prolonged. Without adequate coverage for defense costs, a business may struggle to manage its cash flow, potentially impacting its overall operations and leading to severe financial consequences, including the possibility of insolvency if legal actions become extensive.

While other options may touch on the implications of liability coverage, they do not directly address the specific financial impact that the absence of defense costs would have on a business.