diff --git a/caddyconfig/httpcaddyfile/tlsapp.go b/caddyconfig/httpcaddyfile/tlsapp.go
index 1bfddda1..0fe1fc5f 100644
--- a/caddyconfig/httpcaddyfile/tlsapp.go
+++ b/caddyconfig/httpcaddyfile/tlsapp.go
@@ -211,7 +211,7 @@ func (st ServerType) buildTLSApp(
 					// it that we would need to check here) since the hostname is known at handshake;
 					// and it is unexpected to switch to internal issuer when the user wants to get
 					// regular certificates on-demand for a class of certs like *.*.tld.
-					if !certmagic.SubjectIsIP(s) && !certmagic.SubjectIsInternal(s) && (strings.Count(s, "*.") < 2 || ap.OnDemand) {
+					if subjectQualifiesForPublicCert(ap, s) {
 						external = append(external, s)
 					} else {
 						internal = append(internal, s)
@@ -324,8 +324,12 @@ func (st ServerType) buildTLSApp(
 		globalPreferredChains := options["preferred_chains"]
 		hasGlobalACMEDefaults := globalEmail != nil || globalACMECA != nil || globalACMECARoot != nil || globalACMEDNS != nil || globalACMEEAB != nil || globalPreferredChains != nil
 		if hasGlobalACMEDefaults {
-			for _, ap := range tlsApp.Automation.Policies {
-				if len(ap.Issuers) == 0 {
+			// for _, ap := range tlsApp.Automation.Policies {
+			for i := 0; i < len(tlsApp.Automation.Policies); i++ {
+				ap := tlsApp.Automation.Policies[i]
+				if len(ap.Issuers) == 0 && automationPolicyHasAllPublicNames(ap) {
+					// for public names, create default issuers which will later be filled in with configured global defaults
+					// (internal names will implicitly use the internal issuer at auto-https time)
 					ap.Issuers = caddytls.DefaultIssuers()
 
 					// if a specific endpoint is configured, can't use multiple default issuers
@@ -494,16 +498,23 @@ func consolidateAutomationPolicies(aps []*caddytls.AutomationPolicy) []*caddytls
 	})
 
 	emptyAPCount := 0
+	origLenAPs := len(aps)
 	// compute the number of empty policies (disregarding subjects) - see #4128
 	emptyAP := new(caddytls.AutomationPolicy)
 	for i := 0; i < len(aps); i++ {
 		emptyAP.Subjects = aps[i].Subjects
 		if reflect.DeepEqual(aps[i], emptyAP) {
 			emptyAPCount++
+			if !automationPolicyHasAllPublicNames(aps[i]) {
+				// if this automation policy has internal names, we might as well remove it
+				// so auto-https can implicitly use the internal issuer
+				aps = append(aps[:i], aps[i+1:]...)
+				i--
+			}
 		}
 	}
 	// If all policies are empty, we can return nil, as there is no need to set any policy
-	if emptyAPCount == len(aps) {
+	if emptyAPCount == origLenAPs {
 		return nil
 	}
 
@@ -601,3 +612,21 @@ func automationPolicyShadows(i int, aps []*caddytls.AutomationPolicy) int {
 	}
 	return -1
 }
+
+// subjectQualifiesForPublicCert is like certmagic.SubjectQualifiesForPublicCert() except
+// that this allows domains with multiple wildcard levels like '*.*.example.com' to qualify
+// if the automation policy has OnDemand enabled (i.e. this function is more lenient).
+func subjectQualifiesForPublicCert(ap *caddytls.AutomationPolicy, subj string) bool {
+	return !certmagic.SubjectIsIP(subj) &&
+		!certmagic.SubjectIsInternal(subj) &&
+		(strings.Count(subj, "*.") < 2 || ap.OnDemand)
+}
+
+func automationPolicyHasAllPublicNames(ap *caddytls.AutomationPolicy) bool {
+	for _, subj := range ap.Subjects {
+		if !subjectQualifiesForPublicCert(ap, subj) {
+			return false
+		}
+	}
+	return true
+}
diff --git a/caddytest/integration/caddyfile_adapt/global_options_preferred_chains.txt b/caddytest/integration/caddyfile_adapt/global_options_preferred_chains.txt
index 893b34b4..9173b26b 100644
--- a/caddytest/integration/caddyfile_adapt/global_options_preferred_chains.txt
+++ b/caddytest/integration/caddyfile_adapt/global_options_preferred_chains.txt
@@ -2,7 +2,7 @@
 	preferred_chains smallest
 }
 
-localhost
+example.com
 ----------
 {
 	"apps": {
@@ -17,7 +17,7 @@ localhost
 							"match": [
 								{
 									"host": [
-										"localhost"
+										"example.com"
 									]
 								}
 							],
@@ -32,7 +32,7 @@ localhost
 				"policies": [
 					{
 						"subjects": [
-							"localhost"
+							"example.com"
 						],
 						"issuers": [
 							{
diff --git a/caddytest/integration/caddyfile_adapt/tls_automation_policies_global_email_localhost.txt b/caddytest/integration/caddyfile_adapt/tls_automation_policies_global_email_localhost.txt
new file mode 100644
index 00000000..e8ef3a7e
--- /dev/null
+++ b/caddytest/integration/caddyfile_adapt/tls_automation_policies_global_email_localhost.txt
@@ -0,0 +1,66 @@
+{
+	email foo@bar
+}
+
+localhost {
+}
+
+example.com {
+}
+----------
+{
+	"apps": {
+		"http": {
+			"servers": {
+				"srv0": {
+					"listen": [
+						":443"
+					],
+					"routes": [
+						{
+							"match": [
+								{
+									"host": [
+										"example.com"
+									]
+								}
+							],
+							"terminal": true
+						},
+						{
+							"match": [
+								{
+									"host": [
+										"localhost"
+									]
+								}
+							],
+							"terminal": true
+						}
+					]
+				}
+			}
+		},
+		"tls": {
+			"automation": {
+				"policies": [
+					{
+						"subjects": [
+							"example.com"
+						],
+						"issuers": [
+							{
+								"email": "foo@bar",
+								"module": "acme"
+							},
+							{
+								"email": "foo@bar",
+								"module": "zerossl"
+							}
+						]
+					}
+				]
+			}
+		}
+	}
+}
\ No newline at end of file