Sec. 262.4. Permitted defense-only coverages involving claims of legal liability

(a) No policy may provide defense-only coverage for a legal liability of the insured if the legal liability may permissibly be covered under a policy of liability insurance in this State.

(b) Legal services insurance may provide for the payment of defense-only costs in relation to a claim of legal liability where a liability insurance policy cannot provide coverage for the legal liability of the insured because the coverage is against public policy or otherwise not permitted under the Insurance Law, such as a claim relating to dishonest or fraudulent acts, intentional violation of statute, or the intentional gaining of profits to which the insured was not legally entitled.