Legal Expenses Insurance (LEI) explained?
When someone has been wronged they want justice, but pursuing their rights through the courts can be very expensive. As well as solicitors' costs and fees for a barrister and expert witnesses, a claimant may have to pay their opponent's costs as well as their own if they lose the case.
Legal disputes are often costly and stressful to pursue or defend. Many people are deterred from taking legal action because of the financial risk and uncertainty of the outcome. This is where legal expenses insurance (LEI) can help.
Unlike conventional insurance, LEI does not make a direct payment for a claim. Instead, the insurance covers the legal costs involved in pursuing or defending a claim. Legal costs include the appointment of solicitors, barristers and expert witnesses.
There are two main types of LEI for individuals: personal and motor.
Before the event (BTE) personal legal protection policies typically cover the policyholder and members of his or her household against the areas at greatest risk of potential legal dispute:
- Problems with employers
- Personal injury claims
- Disputes with suppliers of goods and services (including holidays)
- Employment problems and disputes with neighbours are typically covered by most policies.
Some policies add other areas of potential dispute or have them as an option.
Motor legal protection assists motorists that are involved in a road traffic accident involving their vehicle where there are good prospects of the claim succeeding. In such cases the motorist has a right to be able to claim back their uninsured losses from the driver responsible.
Legal protection cover will provide usually in the region of £50,000 to £100,000 of legal costs to help the motorist to recover losses such as:
- Compensation for death or injury
- Their car insurance excess under their comprehensive policy
- Accident repair costs for motorists without comprehensive cover
- Damage to clothes, luggage or personal belongings
- The cost of hiring a car
- Loss of earnings
This enables claimants to receive the professional legal service they would need and expect. The policy usually also provides protection for any one else authorised to drive or use the car and for any authorised passengers.
The solicitor acting for the claimant will handle all aspects of the claim such as locating a specialist (i.e. a medical expert) should this be necessary as a result of injury resulting from the accident. The specialist charges will be met by the legal protection policy.
After the event legal expenses insurance (ATE) are purchased when a claimant has good prospects of success in a claim for compensation but they do not have the benefit of BTE legal expenses insurance or do not have sufficient means to fund the case privately or prefer to enter into a conditional fee agreement with their solicitor. The insurance is usually marketed as a conditional fee agreement insurance.
ATE policies cover the same risks as a BTE policy the difference being that cover is arranged after the insured becomes aware of the need to make a claim. The insurance pays the opponent’s fees and disbursements (e.g. expert reports) if the action is unsuccessful and the insured is ordered to pay them or fails to recover them from his/her opponent. If the case is unsuccessful then the claimant’s solicitor would not normally receive any payment for their work.
If a claimant is successful the cost of the ATE premium should, under the Access to Justice Act 1999, be recoverable from the losing party.
In a nutshell, therefore, before or after the event legal expenses policies provide policyholders with peace of mind and an easy and professional solution when they need it most.
