Understanding Legal Expenses Insurance in the UK

Legal expenses insurance, also known as legal protection insurance or legal expenses insurance, is an essential consideration for individuals in the UK, offering financial protection against the costs associated with legal advice and proceedings. This guide provides a comprehensive overview of what legal expenses insurance covers, its limitations, costs, and alternative options available in the UK.

Legal expenses insurance (LEI) is a form of insurance that covers the cost of legal advice and/or legal proceedings. This type of insurance is valuable as it can fund legal costs up to £50,000 or even £100,000 in some policies​​. It generally includes the legal costs of defending a claim against you, as well as the costs of taking legal action against another party​​. While it can be a standalone policy, it’s often added to home or car insurance as an optional extra​​​​.

Coverage Aspects

The coverage typically includes but is not limited to:

  • Personal Injury: Legal costs incurred in pursuing personal injury claims.
  • Contracts for Goods or Services: Disputes related to contracts, including purchase, sale, or repair of goods like cars.
  • Property: Legal disputes involving property.
  • Employment: Legal issues arising from employment, such as wrongful termination or discrimination​​.

Exclusions and Limitations

It’s important to understand that each insurer has its own guidelines regarding what is covered and what isn’t. Typical exclusions may include:

  • Legal costs against you if you were under the influence of alcohol or drugs.
  • Legal costs if you’re involved in violent or dishonest activities.
  • Criminal or motoring offence fines from a court.
  • Any legal expenses incurred before a legal team accepts the case on your behalf.
  • Compensation for another person or driver taking action against you​​.

The cost of this insurance varies depending on the insurer. It may be included as standard in some policies, while others might charge an extra fee, typically under £30 for a year. When choosing a policy, it’s crucial to read through the details carefully to ensure you are not paying extra for unwanted features​​.

When it comes to legal expenses insurance, common complaints and issues faced by policyholders include:

  1. Insurers Not Meeting Expenses: Refusal by insurers to cover the expenses of proposed legal actions.
  2. Disagreements on Outcome Prospects: Disputes between legal professionals about the likelihood of a successful outcome.
  3. Poor Handling of Claims: Inadequate handling of a claim by an insurer’s solicitor.
  4. Notification Issues: Rejection of claims due to failure to notify the insurer about an event leading to legal proceedings.
  5. Choice of Solicitor Disputes: Conflicts arising when policyholders choose to use their own solicitors, and insurers refuse to cover the claim​​​​.

There are various alternative ways to benefit from legal expenses cover without obtaining it from a car insurer:

  • Home Insurance: Some home insurance policies may include a certain amount of legal assistance.
  • Bank Accounts and Credit Cards: Certain bank accounts and credit cards may offer legal assistance as part of their benefit packages.
  • Trade Unions: Trade unions might provide members with access to legal help covered by their subscriptions.
  • After-the-Event Insurance: This can be taken out when needed, though it might be more expensive than adding legal expenses insurance as an optional extra​​.

Final Thoughts

Legal expenses insurance offers a safeguard against the financial burden of legal disputes. However, understanding the specific coverage, exclusions, and costs associated with different policies is crucial for making an informed decision. Alternatives to traditional legal expenses insurance also present viable options, depending on individual needs and circumstances. As always, it’s advisable to consult with a legal expert or insurance advisor to determine the best course of action for your specific situation.

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