(c) The percentage limitation specified in subdivisions (a) and (b) of this section may be omitted if the policy provides that the insured shall have the option to:

1. (1) select the defense attorney or to consent to the insurer's choice of defense attorney, which consent shall not be unreasonably withheld;
2. (2) participate in, and assist in the direction of, the defense of any claim; and
3. (3) consent to a settlement, which consent shall not be unreasonably withheld.

(d) A legal defense cost offset provision as specified in subdivision (a) or (b) of this section may be included in a liability policy only for the following types of risks or coverages, and only where the per occurrence liability limits for all liability risks and coverages under the policy are at least:

1. (1) $100,000:

   1. (i) employee benefit liability;
   2. (ii) fiduciary liability; and
   3. (iii) employment practices liability.

2. (2) $500,000:

   1. (i) environmental impairment and pollution liability;
   2. (ii) directors and officers liability;
   3. (iii) media, publishing and advertising liability;
   4. (iv) architects and engineers liability;
   5. (v) errors and omissions liability; and
   6. (vi) professional liability, other than medical malpractice liability.

3. (3) $1 million: hospital medical malpractice liability, for renewals only, if the expiring policy contained approved legal defense cost offset provisions.

   (e)

4. (1) A liability insurance policy containing a provision that reduces the limits of liability stated in the policy by the costs of legal defense, or permits offsets against the deductible by the costs of legal defense, and which meets the requirements of paragraph (2) of this subdivision, may be issued or renewed in this State if the policy:

   1. (i) insures a large commercial insured;
   2. (ii) provides primary coverage of at least $5,000,000 per occurrence;
   3. (iii) provides umbrella or excess coverage of at least $1,000,000 per occurrence, where the underlying limits are at least $2,000,000 per occurrence; or
   4. (iv) is written with a deductible, or over a self-insured retention, of at least $100,000 per occurrence.

5. (2) Any policy issued or renewed pursuant to this subdivision must comply with all the provisions of this Part except:

   1. (i) subdivisions (a), (b), (c) and (d) of this section; and
   2. (ii) subdivisions (b)(1)-(3), (c) and (d) of section 71.5 of this Part.