Why do businesses need Legal Expenses Insurance?
Everyone knows that we are in a more litigious society and that legal advice is expensive. What might seem small problems, can become very expensive and threaten the ability of your business to continue to trade, even if the claim against you is unfounded.
Legal Expenses Insurance will cover your businesses legal expenses or prosecution fees for a range of situations, for example, disputes with your former, current or prospective employees. Cover will also include the cost of legal claims relating to property damage, nuisance or trespass or relating to customers dissatisfaction with your service or debt recovery.
The following are just some examples of when Legal Expenses Insurance can come to the aid of a business:
- Employment tribunals – thousands take place each year and can cost a business £000’s to defend
- HMRC tax investigations which can last many months and need regular access to legal advice
- The HSE (Health and Safety Executive) charging you with breaching health and safety regulations
- Contract disputes relating to the purchase, hire, sale or provision of goods or services
Legal Expenses Insurance is usually sold as an optional cover under your business insurance policy.
What is included in Legal Expenses cover?
Typically Legal Expenses Insurance will give you up to say £100,000 of cover per incident for your commercial legal expenses and against the potential costs of legal action brought by or against your business. Cover may be limited to a certain figure, say £1million, over the course of a policy year.
Legal Expenses cover will normally include access to a confidential 24/7 legal helpline and may have other features such as a tax advice helpline or crisis PR support to help you deal with negative publicity and avoid damage to your business reputation.
Cover can vary so it is important to check your insurance policy and talk to your adviser to make sure that it is adequate for you.
How does Legal Expenses Insurance work in practice?
Normally you should call the legal advice line in your policy as soon as you are aware that there might be a problem. Make sure you have your policy number when you call. They will then check that your claim is covered by your policy and if it is it will be passed to lawyers to assess. Even if the claim is not covered you may still be able to get some help and information.
For most claims, the lawyers will assess whether you are likely to win a court case to decide if there are ‘reasonable prospects of success’ and if there are they will take on your case. For some claims such as criminal legal defence cases, the lawyer will represent you regardless as you are ‘innocent until proven guilty’.
Your claim, if accepted, will be managed from start to finish. The vast majority of cases are settled out of court but if this is not possible your insurance will cover you for any court action that is necessary (subject to the limits in the cover). Of course, there is always a chance you may not win in court in which case the insurance will cover the other side’s costs.
Lansdown Insurance Brokers are specialists in Block of flats insurance, Vineyard insurance and Business insurance. We are able to provide flexible policies to suit individual client needs and provide advice on what cover is needed. For more information call the team on 01242 524498.