Legal Expenses Insurance Explained
At Truth Legal we refuse to join any insurer panel for legal expenses insurance. We have, however, acted for our clients under most of the available legal expenses insurance on the market, not charging our client anything extra. We have also helped many clients to exercise their “freedom of choice” of solicitor so that we – rather than a large, panel firm, often nowhere near our clients – is appointed.
On this page we will explain how legal expenses insurance works and how you can instruct your own solicitor using the “freedom of choice” doctrine.
What is legal expenses insurance?
Legal expenses insurance is insurance which is usually purchased with home or motor insurance; however, it is possible to buy legal expenses insurance on its own. Many people have legal expenses insurance but do not know that they have it and, if they have it, many people are clueless as to what it covers. In our experience, many insurers, it seems, go out of their way not to remind their policyholders about the policy which they sold.
Unlike some insurance which is purchased “after the event”, legal expenses insurance is bought “before the event” i.e. before you need the insurance – like most insurance products.
What legal actions does legal expenses insurance typically cover?
Most legal expenses insurers will only usually cover very particular claims or defences.
The norm for the majority of household-related legal expenses insurance policies is to cover the pursuit, or defence, of legal proceedings, arising from their policyholder’s:
- ownership of the insured home;
- employment situation;
- death or personal injury claims; and
- claims arising out of contracts for the sale and supply of goods and services.
In relation to motor-related legal expenses policies, the typical policy only covers claims which arose from the use, or ownership, of the insured’s vehicle.
At Truth Legal we have not seen a policy of insurance which would cover a defamation action (either bringing or defending) or legal expenses insurance policies which covers matters such as crime, immigration, family, judicial review etc in which there was/use to be legal aid.
How and when to notify a claim to your legal expenses insurers
Most legal expenses insurance policies require their policyholders to report a claim to them as soon as possible, over the telephone or in writing. For claims involving employment law, a claimant should act quickly because time limits are very tight (often three months less one day to start ACAS Early Conciliation).
To find your insurers, locate your insurance policy and either telephone general enquiries, or locate the dedicated number which only deals with legal expenses insurance (as they are likely to be different insurers). Once you are speaking to the correct person, it is wise to request that a form is emailed to you to complete, rather than explaining your case over the telephone to someone in a call centre.
At Truth Legal we often help our clients to complete the claim notification form to ensure that the insurers fully understand the claim that they are being asked to fund.
How do the insurers assess the case?
Legal expenses policies normally contain a clause which allows the insurers to drop a claim, or not even to commence a claim, if there are no “reasonable prospects of success”. This means that a claim does not have at least 51% chance of winning. Sometimes an insurer will assess the prospects of success themselves, and sometimes they will ask their panel solicitors to assess the claim.
Panel law firms do not always use solicitors to assess a case. Usually panel law firms tend to be larger law firms which have a significant number of paralegals. At Truth Legal we have some concern about the use of panel solicitors because, although they ought to be acting exclusively in their individual client’s best interests, they of course have a longstanding, commercial relationship with their paymasters – the insurers; and it is in the interests of the insurers to support as few claims as possible, particularly as legal expenses insurance is relatively cheap.
If you are of the view that the assessment of your case by an insurer themselves or via their panel solicitors is incorrect, then you can challenge the decision. To do so, it is usually prudent to provide the insurer with alternative legal advice (assuming the advice supports you) from a firm such as ourselves. If, then, an insurer does not provide funding for your case then you can complain to the Financial Ombudsman Service or bring a claim against the insurers (though be mindful of exposing yourself to their costs).
In the event of a disagreement between the advice of a panel law firm not to support a claim and another law firm who are of the view that a claim enjoys reasonable prospects of success, the insurer should refer the matter to a barrister to provide an advice on whether funding should be granted.
The cost of legal proceedings compared to the amount claimed
It is normally written into a legal expenses insurance contract that an insurer does not need to fund a claim if a prudent uninsured person probably wouldn’t fund the claim themselves. By way of example, you cannot expect your insurer to spend, say, £1,000 on legal fees pursuing a £150 claim for you.
Can you choose your own solicitors under legal expenses insurance?
Yes and no.
Most legal expenses policies allow the insurer to appoint their own choice of solicitors (usually the panel solicitors) up to the time where legal proceedings start – unless there is a conflict of interest.
But once legal proceedings commence (when the legal “claim form” is issued or an ET1 in an Employment Tribunal) – or if there is a conflict of interest – the law (regulation 6 of the Insurance Companies (Legal Expenses Insurance) Regulations 1990 [SI 1159]) allows policyholders to choose their own solicitors
If you are adamant that you want a particular firm of solicitors – such as Truth Legal – to represent you from the beginning of your case, then you should make these arguments in writing to the case handler at the insurer. Your arguments might include, for example, that your preferred solicitors:
- Have been instructed by you before proceedings and therefore fully understand the issues.
- Are nearer to you and it is important that you meet your solicitor in person.
- Have a particular expertise in the area of law which you need.
- Are already representing other clients who have similar claims to you.
- Have been acting for you on a related matter and therefore have special knowledge of your case.
- Can communicate with you better than a panel firm of solicitors due a language requirement.
- You are likely to get a more experienced solicitor in your preferred firm than in the panel firm.
If your legal expenses insurers still will not let you use your preferred solicitors and you still want to use your preferred solicitors, we have seen a number of our clients transfer their case to the panel solicitors in order to commence the claim and then demand that the case is transferred back to the preferred solicitors – Truth Legal.
If you successfully use your preferred solicitors then the insurer will require the non-panel solicitors to agree to the insurer’s standard terms of appointment. At Truth Legal we accept the terms offered by legal expenses insurers, however, some firms either demand a higher rate from the insurers or seek additional payment from their client. The law is somewhat unclear as to whether the non-panel solicitors can charge more fees than the panel solicitors would be paid. At Truth Legal we do not waste our clients’ time by demanding higher fees from the legal expenses insurance, nor do we ask our clients to top-up our fees.
If you have legal expenses insurance which you want to use to bring or defend a claim, please contact one of our solicitors to arrange a free, no-obligation consultation at a time convenient for you. It is your policy – use it.