**Policy Aggregate**: The total limit of our liability under this policy for all "loss".

The limits of this policy apply separately to each consecutive annual period and to any remaining period of less than 12 months, starting with the beginning of the policy period shown in the Declarations, unless the policy period is extended after issuance for an additional period of less than 12 months. In that case, the additional period will be deemed part of the last preceding period for purposes of determining the Limits of Liability.

### 7. PAYMENT OF "COSTS":

"Costs" incurred directly by the insured with our written consent and for which the insured is not covered by the underlying insurers because of the exhaustion of the underlying limits, shall be apportioned as follows:

a. Should any claim or claims be settled or reduced to judgment for an amount in excess of the limits of "underlying policies", then we shall contribute to the "costs" incurred by the insured in the ratio our proportion of the "loss" as finally adjusted bears to the whole amount of such "loss". Our contribution to "costs" ends when we have used up the applicable limit of liability in the payment of judgments or settlements under the terms of this policy.

b. In the event that the insured elects not to appeal a judgment in excess of the underlying limit, we may elect to conduct such appeal at our own "cost" and expense, and shall be liable for the taxable court "costs" and interest incidental thereto, but in no event shall our total liability exceed the limits of liability as stated above, plus the expense of such appeal.

### 8. DEFINITIONS:

a. "Loss": "Loss" means the sum paid in settlement of damages for which the insured is liable after making deductions for all recoveries, salvages, and other insurance (other than recoveries under the "underlying policies"), whether such other insurance is recoverable or not.

b. "Costs": "Costs" means payments allocated to a specific claim or suit for its investigation, adjustment, or defense including:

(1) Attorney fees and all other litigation expenses.

(2) The cost of bonds to appeal a judgment or award in any suit we defend.

(3) Up to $250 for the cost of bail bonds required because of accidents or traffic law violations arising out of the use of any vehicle to which this policy applies.

(4) The cost of bonds to release attachments, buy only for bond amounts within the Limits of Liability available.

(5) Reasonable expenses incurred by the insured at our request to assist us in the investigation or defense of the claim or suit, including the actual loss of earnings up to $100 a day because of time off from work.

(6) Costs taxed against the insured in the suit.

(7) Interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in court the amount available for the judgment under Provision 6—LIMITS OF LIABILITY.

(8) Pre-judgment interest awarded against the insured on that part of the judgment we pay.

"Costs" do not include:

(1) Salaries and expenses of our employees or the insured's employees, other than the expenses described in (5) above;

(2) Fees and the expenses of investigation and adjustment services purchased by the insured on a fee basis when the insured purchases such services; for the "controlling underlying policy";

(3) Fees and expenses for counsel under general retainer by the insured.

c. "Underlying Policies": "Underlying Policies" means all of the policies designated under Item 5 ("Underlying Policies" and Limits) and Item 6 ("Controlling Underlying Policies" and Limits) in the declarations.

If any such policy is renewed, replaced, or endorsed, the renewal replacement or amended policy shall still be an "underlying policy". Except that any reduction in "limits", other than under Provision 4 of this policy, shall not alter the total of the limits of the "underlying policies" upon which this policy is based. "Limits" in "underlying policies" include any insured's participation, self-insured retention, or deductible under such policies.

d. "Controlling Underlying Policies": "Controlling Underlying Policies" means any policy designated on the declarations under Item 6 ("Controlling Underlying Policies" and Limits) including any endorsements to such policies.