Legal expenses insurance
Lots of people have this insurance as part of policies on their car, motorcycle, van or house. The policy can be bought as a stand alone policy, but few people search it out. The policy will allow you to pursue a compensation case, and cover your liability to pay your own solicitor’s costs and disbursements, and those of the other side, if your case fails.
Your legal expenses insurer must be satisfied the case has reasonable prospects of success, and this is necessary all through the case. Just like the after the event insurance the insurer can pull out if those prospects are no longer reasonable.
The policy will have an indemnity level, which is the maximum the legal expenses insurer will pay. You cannot increase the amount of this indemnity, so if the costs risk in your case is greater than the amount of the policy indemnity you may be advised to take out additional insurance called after the event insurance to cover the remaining risk.
Some legal expense insurers will insist you use solicitors they nominate. They may have a trusted panel of solicitors, or more likely they will receive payment from the solicitor to whom they refer the case, called a referral fee. The insurer is not entitled to insist you use their panel case, particularly if your case is not run of the mill. Do ask your insurer about the financial arrangements they have with their panel solicitors. You should be sure the solicitors will be committed to your case, and not be too worried about presenting a bill to the legal expenses insurer.
Do let us know your experiences of legal expenses insurance.
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8 thoughts on “Legal expenses insurance”
Am I right in thinking that legal expenses insurance money is held by the insurer, rather than the law firm who underwrites it? And can I get the insurance company to pay me that money?
I would be grateful if someone could please tell me the answers to the above questions.
Legal expenses policies differ, but in general, such policies are there to cover your liability to pay your own legal fees and those of the other side if your case is not successful.
I cannot imagine such an insurer paying money to you to cover your legal fees. The insurer is more lkely to pay your solicitor direct.
I was traumatised by having to defend a malicious prosecution and finding that my legal insurance did not cover ‘defence’ or ‘litigation’ that it took over 6 months to tell the ombudsman about the hell I had been through. My well known insurer insisted that they were ‘just a broker’ and ‘nothing to do with them’ that I settled a sum to make him go away with an agreement of a Court Order barring him from contacting me for 5 years but out of time for the ombudsman to look at what was done to me and the consequences on my life. I want an insurer to protect me, I feel so vulnerable. Can you recommend anything please?
Legal expenses insurance is usually sold alongside other products, such as other types of insurance, a bank account or credit card, or membership of an association. This is because the insurer does not want to sell direct to the public as the only people likely to buy are those who are likely to use it. The insurer wants a spread of risk.
Legal expenses insurance is designed to allow you to pursue a legal case. The policy insures the risk that you will have to pay legal costs if your case is not successful. Before a case can proceed the legal expenses insurer will have to be satisfied the case you want to pursue has a good chance of success.
If someone brings a case against you then I do not think a legal expenses insurance policy will help you. Such policies are not intended to cover your liability to others. To cover such liabilities you arrange insurance on your car and public liability insurance on your house.
Can you recommend a company that can offer personal legal expenses cover as a stand-alone policy?
I cannot recommend one insurer of legal expenses above another because I do not have enough experience of each insurer at a time when the insurer has to pay up or deal with difficult situations.
The majority of cases run with legal expenses are successful, and where costs are recovered from the other party to the case, the legal expenses insurer pays nothing. It is how an insurer handles a case where costs cannot be recovered if the case succeeds that is the real test, and employment cases are what I have in mind.
The Financial Ombudsman Service set out some helpful guidance at http://www.financial-ombudsman.org.uk/publications/technical_notes/legal-expenses.html and Which have a go at making some sense of the market at http://www.which.co.uk/money/insurance/guides/legal-expenses-insurance/
My feeling is that if you buy such a policy each year, and remain with the insurer, you may be able to get greater support as a longstanding policy holder. The downside of this approach may be that you will pay more, the reason being that insurers know that those who specifically insure for legal expenses are more likely to use them. Most legal expenses insurance policies are sold as extras with existing policies, and not bought specifically.
A Close friend of mine has a “your key policy”, and he asked me to contact yourselfs to see if i could obtain a free policy from you.
Mr P J Hey.
Thank you for your question.
Your close friend is correct, free accident legal expenses cover is available through YourKey, which is a trading style of this practice.
The concept came from frustration with the legal expenses insurance which is sold to every person who buys an insurance policy on a vehicle. The cost is rising, and I would say £25 is a fair average per vehicle. It is you who needs legal expenses insurance, not your vehicle, and by limiting cover to use of one vehicle you are being sold limited cover at a rather high price.
It also has to be said, that when you contact your insurer after an accident which is the fault of someone else, the insurer will receive commission for arranging the services you need, and referring your case to a solicitor. By contacting YourKey first that commission can be used to cover the cost of the legal expenses insurance given away.
YourKey gives the policy away free, and renews it each year without cost.
The cover is also wide, and includes your wife/partner, children at home under 21 years, and your passengers and pillions.
To sign up just visit http://www.yourkey.info/become-a-member
I reckon if you have two cars in your family you will save enough to buy breakdown cover.
Let me know what you think.