Most households have the option to add legal expenses cover to their household insurance policy, but you may be wondering whether this cover is worth paying extra for.
Given that legal fees can be exorbitant, legal expenses insurance can be extremely useful if you end up in a dispute that cannot be resolved without involving solicitors, yet many people don’t realise this or don’t know what it covers.
Legal expenses insurance gives you free legal advice and the use of a lawyer in case of a dispute. This might be about employment, a boundary issue with your neighbour or any other civil matter. It usually costs £30 a year or less and is often sold alongside home or car insurance, although some insurers will include it as standard. You may find you already have it if you have a paid-for bank account.
Here, we explain what legal expenses insurance covers, so that you can decide whether it is worthwhile adding it to your home or car insurance.
What does legal expenses insurance cover?
Legal expenses insurance can only cover civil disputes (not criminal proceedings) but – even then – cannot deal with all types of cases. There are two types of legal expenses insurance:
- Household cover legal expenses insurance. Legal expenses insurance arranged through a household policy typically covers up to £50,000 of legal costs.
- Car cover legal expenses insurance. Legal expenses insurance arranged through a car policy typically covers up to £100,000 of legal costs.
It’s worth noting that car insurance legal expenses cover is only designed to pay the cost of a claim arising as a result of a car accident. In some cases the cover may duplicate insurance already provided by a comprehensive policy.
Household legal expenses insurance may cover:
- Death or personal injury
- Contract disputes arising out of the sale, purchase or hire of goods or services (including holidays).
- Property disputes such as boundary disputes, noisy neighbours, sale of property and tenancy disputes.
- Employment disputes and related tribunal proceedings
Policies can vary in terms of the cover they provide, so you’ll need to read the small print carefully so you know exactly what is and isn’t covered. For example, many insurers don’t cover disputes with builders, however some do, although generally up to a lower limit of £25,000. Others only cover building contracts worth less or more than a certain amount (often £5,000).
Some insurers impose a lower limit of £25,000 on employment claims, while others exclude claims relating to redundancy or personal injury, or claims relating to a property being sold or purchased or landlord/tenant disputes, whereas others don’t.
Home insurance renewal premiums have a habit of increasing every year, even if you haven’t made a claim. Compare home insurance quotes from more than 50 UK providers.
What are the potential downsides?
There are a few issues with legal expenses cover, the main one being that it can be difficult to compare products and shop around for the best deal because legal expenses insurance is usually bought as an add-on. As mentioned, different insurers cover different types of dispute with varying claim levels and coverage, and key information is often buried in the small print.
Awareness of what it covers is not widespread either, with many people knowing little or nothing about the benefits of legal expenses cover.
If you want the protection that this cover can offer, bear in mind that in the event of a claim, you won’t be able to choose your own solicitor to help you – you must use one supplied by your insurer. The solicitor provided by the insurer often decides on whether or not the case can be covered by legal expenses insurance and/or whether it has a realistic chance of succeeding. Often, cases will only be covered by legal expenses insurance if the solicitor is confident that there is at least a 50% chance of winning.
A final thought…
If you’re worried about ever being involved in legal action and don’t know how you’d afford the costs involved, you might consider a small annual outlay for legal expenses cover worth it. As with any type of insurance, we usually only realise how important it is in the event we need to make a claim, so whether you want to pay a bit extra for additional peace of mind will depend purely on your personal circumstances and preference. Find out more about home insurance in our guide Your essential guide to home insurance.
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