How Does Legal Expenses Cover Work?

This may not be an automatic cover as quite often the policy will dictate that the holder will need to contact the insurance company prior to incurring any legal expenses and make a statement that they are very confident of winning their case. If an offer of settlement is made then the policy holder is normally required to accept this.

The way that this works is that after a claim is received the insurance company will conduct an assessment of the situation often calling upon their own in house solicitors for advice on the dispute. The point of this is to determine whether the policyholder has a good case or not and whether they would be likely to win in the courts. Should this assessment conclude that the case is weak or unwinnable then they will notify the holder of the policy that they are not prepared to cover them for legal expenses if they pursue the dispute.

If the case seems more uncertain or the insurance company believe that the policyholder has a good chance of winning then they will normally instruct one of their panel of solicitors to analyze the case in full.

The insurance companies set up these panels of solicitors based on their experience and competency and they do not work for the company. They often agree a no win no fee arrangement which means that the solicitor will only be paid if they win the case and then recover their costs from the negligent party. Sometimes they are paid on a per case basis if the dispute seems less certain.

For individuals the most common use of legal expenses cover is in cases of motoring accidents, personal injury claims, minor consumer disputes and to recover uninsured losses from other parties. It does not mean that this type of cover cannot be used in other instances and other common disputes that it can be used for are property issues and claims of medical negligence.

Legal expenses cover is not limited to individuals. Companies and those in business can purchase this cover to protect their business. It is a fact that a lot of small business owners will not defend their business and pursue a dispute even when they know they would win through fear of the legal costs that are involved in doing this. There are many insurance companies offering these kinds of policies to businesses and this normally includes cover for employment disputes and compensation, legal defence, tax protection and property protection and physical injury.