Simply that the Legal costs for handling the claim are kept separate form the actual limit of liability.
Then the limit remains for settling the damages only.
There is however a proviso that the legal costs cannot exceed the amount of the maximum limit. With a costs inclusive limit of indemnity, both the legal costs accrued and whatever is left over to pay for damages are in the one sum insured.
Costs exclusive limits are mostly found in professional indemnity policies but costs inclusive limits are found in Directors and Officers policies. Which is why most Directors are under insured.
