Legal expenses insurance (LEI) is also known as legal protection insurance or even just legal insurance.
It can pay for the cost of legal advice, if you need help, in a variety of scenarios – for example –
- a boundary dispute with a neighbouring property owner
- a building dispute with a tradesman who has done work on your house
- an employment dispute
- a personal injury compensation claim following an accident
The insurance can cover you whether you are the person initiating the claim or the person against whom the claim is being made.
The main benefit of LEI is that it provides you with a route to justice which may otherwise be too expensive for you to consider.
It can be a stand-alone policy but is often an add-on to other insurance, such as house contents insurance.
Types of LEI
There’s an important distinction between ‘before the event’ (BTE) LEI and ‘after the event’ (ATE) LEI.
The ‘event’ is the thing that’s happened for which you need the legal advice under the insurance (e.g. a personal injury accident; getting dismissed from your job; or finding that work done on your house by a tradesman is defective).
Sometimes you already have insurance in place that might cover you for legal advice in relation to that event. That’s BTE insurance.
If you don’t have BTE insurance, you may need to see if some form of ATE insurance is possible. ATE insurance coupled with a no win-no fee agreement is a common way to run a personality injury claim, for example.
How much does LEI cost?
At a cost of around £30 per year or less, BTE LEI is fairly cheap.
Premiums for ATE LEI are much higher. Because the ‘event’ has happened and the insurance is definitely needed, the risk to the insurer is higher and this is reflected in the cost of ATE insurance.
As an example, an ATE insurer we deal with regularly charges about £200 for a road accident personal injury ATE policy and about £500 for an accident at work ATE policy.
What will LEI cover?
If you need to make use of it, the insurance will cover negotiations and also court proceedings, if necessary. It covers your own legal expenses/costs and any legal costs you have to pay. It does not, however, meet the cost of any compensation you may be required to pay (or guarantee that you will receive any compensation awarded to you will be paid).
Your claim must have reasonable prospects of success.
With any kind of legal expenses insurance, the insurer will assess the merits of your case and only accept the claim if it thinks you have a reasonable chance of succeeding with the claim (or defence). ‘Reasonable prospects’ usually means chances of 51% or better.
And that’s an ongoing process of assessment and reassessment.
If your opponent makes you a settlement offer, that may affect the reasonable prospects of continuing with your claim. You may be advised that, if you don’t accept the offer, your chances of beating it are less than 50%. Almost certainly, the policy conditions will require that you should accept any reasonable settlement you are offered, rather than holding out for a better deal. If you don’t, the insurers may refuse to continue cover under the policy beyond the point where the ‘reasonable’ offer is made.
How much freedom do you have to choose your own solicitor?
Under BTE insurance, you usually have to use the insurers’ own panel solicitor if you want to be covered under the LEI policy for any negotiations before a court action is raised. That may not be a problem, depending on the type of legal dispute you have.
For example, personal injury solicitors are used to working no win-no fee. The risk to you of having to pay costs/expenses only becomes real at the point when a court action is raised. If you prefer to use a local solicitor, they can be covered by the LEI insurance once it becomes necessary to raise a court action. Where the claim settles before a court action is needed, the solicitor will be paid via the ‘protocol’ expenses they will recover in addition to your compensation.
How much cover do you get and is it enough?
A typical level of cover for legal costs is £50,000.
What exactly is covered will vary between LEI policies – and you should check – but possibilities are:
- the other side’s legal costs (including outlays for things like expert reports and medical reports);
- your own solicitor’s legal fees;
- outlays reasonably incurred by your solicitor.
£50,000 will probably be enough for most disputes that go to the Sheriff Court. For medical negligence cases, however, cover of at least £100,000 is recommended and it can be necessary to try and get “top up” cover – which will have an additional (premium) cost attached to it.
How worth it is LEI for different types of case?
These have the potential to be very costly for you.
- Your builder has half-finished work at your house but is refusing to complete it.
- You’re unhappy with the quality or durability of work done on your property by a tradesman.
As applies to just about any possible legal dispute, it’s never too early to get advice from a solicitor.
Here, early advice will help you understand the strengths and weaknesses of your position. Without that advice, the situation is more likely to drift and become more complicated – and so more difficult and costly to sort out.
No win-no fee arrangements are unlikely to be available for contractual disputes.
LEI is a good idea here.
In these situations, as an employee, you need to get advice quickly.
For many claims which end up in the employment tribunal, there’s a time limit to claim of about 3 months.
The employment tribunal does not often award costs to either side, even if one was clearly ‘the winner’. For that reason, no win-no fee arrangements are not generally an option for employment matters.
Because you must reckon with having to pay your own solicitor’s fees, it is a good idea to take out BTE LEI to allow you to get advice promptly, if you need it.
Otherwise, without advice, these situations tend to drag on, which may mean you missing a time limit. Or you may decide to take the initiative and resign before getting legal advice – which is usually a bad idea.
So, as for contractual disputes, having BTE LEI in place could be a really big help if you need to get legal advice on an employment-related matter.
In most personal injury claim scenarios, there is an opposing insurer ‘in the background’ who will be responsible for paying any compensation and the solicitor’s fees if the claim is successful.
If the claim has to go to court and succeeds, the costs/expenses do usually get awarded in your favour.
This is why no win-no fee ‘works’ for personal injury claims in Scotland.
LEI insurance is generally needed but that’s ATE insurance, taken out only after the accident.
If you have BTE insurance and get injured in an accident, you can use that insurance to help you for any claim you need to make. But BTE insurance is not nearly so crucial to have in a personal injury scenario than in relation to contractual or employment situations.
Family Law and Criminal Law
LEI insurance is not available for these areas of law.
It’s a good idea to check any insurance policies you currently have.
With LEI insurance so often sold as an add-on to other insurance, it’s perfectly possible that you have BTE LEI already but don’t know it.
And check it soon.
Policies often place a time limit on potential claims being intimated to the LEI insurer You don’t want to miss out on the chance of benefiting from LEI insurance cover because you didn’t move quickly enough in notifying your LEI insurer.
Legal expenses insurance is a cost-effective way of making sure you can afford and achieve access to justice.
You should check to see if you have it already (i.e. ‘before the event’ insurance) because in many cases it is a ‘hidden’ benefit attached to other insurance you may have taken out.
If you need legal help in resolving a dispute, the fact you did not have BTE LEI in place already is not necessarily a barrier to getting insurance cover. But it depends on the type of legal problem you need advice about. If it’s a personal injury claim, ATE LEI may well be available but not if it’s a contractual or building dispute, or an employment law issue.
LEI insurers will often direct you to their own chosen solicitor but there’s no reason why you can’t choose to go with your local solicitor, if you prefer. He or she will be able to have cover under the insurance if your case has to go to court. Before the stage of court action, insurance is not so crucial. This is especially the case with personal injury claims. A local, specialist solicitor may have a number of advantages over a more distant, insurers’ panel solicitor.
With annual premiums at a level less than the cost of a full tank of petrol for a car, LEI insurance is worth it. It does not cover every situation in which you might need legal advice. On the other hand, those situations it does cover are among the most significant ones you could ever face. They’re the ones where, if you had to pay for legal advice yourself, you might not get very far. You might not even get started.
How we can help
In this article, we asked: Is Legal Expenses Insurance worth it? We decided that, on the whole, it is worth having.
Should you have any questions arising from this post, please do get in touch with us. We want the information on this website to be as all-encompassing and as clear as possible. Your questions help us to revise the information on this website, for everyone’s benefit. Contact us by phoning 01343 544077 or by sending us a Free Online Enquiry.
If you want to ask about our personal injury claim services, don’t forget that you can get a free case assessment from us by making contact in the ways described above.
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