Per the description of the item, my Champion should be getting +1 def EACH time an enemy attacks it. In practice, only the first melee physical attack triggers the +1 def- no subsequent attacks do.
For the sake of replication, my Champion is using the shield in the Burned Lands/Pyre of Man Wildland.
PS: I haven't been attacked by a ranged physical attack yet, so I don't know if archers would trigger the ability. I do know abilities (like the Fire Shill's ember attack) don't seem to trigger the bonus.
