Have a case with 100k policy limit. Policy says costs and fees come out of that limit. Can they do that?

Answer: Probably, so long as the policy is not a statutory policy so that applying the reduction for defense costs would provide less coverage than the statute requires.  The general rule is that if the coverage is not statutorily required, the parties are free to contract for whatever policy provisions they wish.  See: Frank v. Allstate, 1986 OK 42, 727 P.2d 577; Equity Mut. Ins. Co. v. Spring Valley Wholesale Nursery, Inc., 1987 OK 121, 747 P.2d 947.

Can I recover expert witness fees as costs?

Answer: The law seems to be pretty well developed on this. You can recover if it is the opponent’s expert whom you had to depose but cannot if it is your expert. Dulan v. Johnston, 687 P.2d 1045 (Okla. 1984): Expert witness fee not allowable as costs. 12 O.S. 1999 Supp. § 942 - Costs which judges may [meaning “must” per Atchley v. Hewes, 1998 OK CIV APP 143, 965 P.2d 1012] award include “statutory” witness fees. Atchley v. Hewes, 1998 OK CIV APP 143, 965 P.2d 1012: Reasonable fees paid an expert witness for discovery per 12 O.S. Supp. 1996 § 3226(B)(3)(c)(1) are recoverable as costs under 12 O.S. 1999 Supp. § 942. A doctor is an expert witness when she is retained specifically to testify at trial and express an opinion based both on facts gleaned from exam and consideration of matters within the doctor’s realm of expertise. A party’s treating physician is not considered an expert witness unless doctor’s opinion to be introduced at trial is based both on treatment of party whose condition is at issue and consideration of matters within doctor’s realm of expertise that are outside the patient’s treatment. 965 P.2d 1012, 1015, citing McCoy v. Black, 1997 OK CIV APP 78, 949 P.2d 689.