What are Supplementary Payments in a CGL policy, and name two examples?

• A. Cancellation of the policy mid-term.
• B. Additional payments the insurer makes during defense of a claim, such as defense costs and bonds (up to stated limits), and other specified expenses.
• C. Direct indemnity for losses beyond policy limits.
• D. Medical payments for insureds.

Answer: (B)

Supplementary Payments are the insurer’s extra payments that cover defense-related costs during the defense of a claim. They are paid in addition to the policy’s limit of liability and do not reduce that limit. Two common examples are defense costs (attorney fees, investigation and other costs incurred in defending the claim) and bonds (such as bail, attachment, or appeal bonds) that the insurer covers as part of the defense, up to the specified limits. Other related expenses may include interest on judgments and court costs, as described in the policy.