Legal Expenses Insurance
Legal expense insurance is purchased either before or after an event to fund the cost of defending or bringing a court case. It can also be paid to be able to access legal advice. ‘Before the event’ kind of insurance is purchased for use in the future.
On the other side, the ‘after the event’ insurance is bought after the event has already taken place. The policyholder acquires the insurance so that in case they are found guilty in a court proceeding, they will not incur losses. The losses arise if the policyholder is required to pay the other party.
‘After the event’ policies are used either when ‘before the event’ policy is depleted or if there is no ‘before the event’ policy. In most case, ‘after an event’ policies are pegged on a “no win, no fee” policy. The insurance company charges you a fee if your action is successful. On the other side, if you are unsuccessful, then the insurer pays for some of the costs you incur in the legal action. The fee paid by the insurer does not cover your opponents legal cost and the cost incurred in preparing the action.
The premium for ‘after the event’ legal insurance is higher compared to those of ‘before the event’ insurance. The premium is paid after the legal action. ‘After the event’ policies are considered active around the same time the legal action begins. The insurer is very careful when selling ‘after the event’ policies.
In some case, the policies have unusual conditions specific to the current situation. The risks involved in the legal action are used to determine whether or not to sell the policy. An insurer can deny you a legal expense insurance if they have reasons to believe the legal action will be unsuccessful. The reasons include:
- Lack of enough evidence
- No known cause of action
- Legal obstacles like immunities decided case law or statutory time bars
‘Before the event’ Legal Insurance
The insurance policy is sold as you buy other insurance policies like car insurance or house insurance. For your insurer to pay your legal costs, they must be sure that you will win your case. In normal cases, the insurance company pays for;
- Your court fees
- Your solicitor’s expenses and fees
- Your opponent’s legal costs
- Costs for expert witnesses
Unfortunately, if you lose the case, the insurance company will not pay for the compensation asked for. They will also not take your case and neither do they pay for all types of legal problems. For you to use your insurance to cater for your legal costs, you must remember these conditions.
- Choosing a solicitor: Some insurance companies do not allow you to choose a solicitor. For those that allow, they have a say in the choice that you make. If the solicitor’s fee is higher than anticipated, they can turn down the solicitor.
- Reporting time: Make sure you report the incident not more than six months after it happens. Otherwise, the insurance company will not cater for the costs.
- Limited legal expenses: Insurance companies limit the amount of money that they are willing to spend. You may have to look for finances to pay for the expenses if the expenses exceed the set limit.
- Opponents offer: The insurance company expects you to accept any offer presented by your opponent. If our opponent presents an offer to you but you decide to turn it down, the insurance company does not continue to cover your legal action.
What does ‘before the event’ Insurance cover?
- Consumer problems that involve hiring or buying goods or services
- Contract problems experienced when selling or buying non-structural work or a house
- Personal injury resulting from negligence from another person
- Tenancy problems
- Damage or loss of property due to someone else’s negligence
- Employment issues
Alternatives to Legal Expense Insurance
- Legal aid: It provides legal representation and advice or some civil cases. However, this option is limiting as it does not cover personal injury.
- Savings: When you compare the cost of pursuing or defending a court claim, it costs a lot. If you have savings, you could instead use it.
- Trade unions: Members of trade unions have the privilege of accessing legal assistance concerning all issues.