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What is legal expenses insurance?
As a business you will be engaging with a variety of employees, customers and suppliers on a daily basis. Although problems are rare, they do occur and can lead to costly legal expenses to resolve.
The stress and financial burden are things which can be minimised with legal expenses insurance. Put simply, this form of insurance will cover you financially if legal action is brought by you or against you.
If you are wondering what business legal expenses insurance (LEI), this guide will provide the information you need. Also known as legal protection insurance (LPI), this type of insurance can provide cover for a range of legal expenses. We take you through the key aspects of legal expense insurance and help you find the best price for your business.
What is the definition of legal expenses insurance?
Although every business tries to avoid legal action, there is always a chance your business may need legal assistance. Legal expenses insurance is designed to provide protection in the event of legal action against a business or individual, depending on the cover. A policy could pay for lawyer’s fees, court charges, costs of an expert witness and additional costs, if the claim is unsuccessful.
This type of insurance will help you access legal advice as quickly as possible, to minimise the impact of any issues as they arise. In many cases businesses choose to add legal protection to their core business insurance policies. For example, professional indemnity, employer’s liability and public liability insurance.
What does legal expense protection cover?
Legal expenses insurance will cover many costs resulting from your business activities. This extends to disputes within your current business and past or potential employees. The legal insurance will also cover legal expenses relating to:
Prosecution fees
HMRC tax investigations
Civil actions
Faulty goods
Property protection
Employment disputes
Compensation claims
Legal defence
Statutory licence appeals
Debt recovery
Contract disputes
Unlike prepaid legal expenses, a legal expense insurance policy is not designed to provide cover for specific events. Instead, legal expenses insurance will provide cover for unforeseen events and legal assistance.
What does legal expense protection not cover?
There are some legal expenses which a business legal expense policy will not cover, such as:
Issues which arose before the policy began
Legal costs which were paid before the insurer accepted the claim
Claims where the likelihood of success is below 51%
Anything which is specifically excluded in the policy documents
Many providers of legal expenses cover also offer a tax advice helpline. This is a confidential legal helpline which can provide support in times of need. They can also assist with PR, to help your business avoid damage to its reputation. Should a legal issue arise, the insurers will then provide the legal representation and expense cover you require.
One of the most important aspects to note is that there is no guarantee your legal expenses claim will be taken up. If you contact your insurer, there is no guarantee that you will be offered legal representation for your case. For a claim to be taken up, the insurer must be satisfied that you have a chance to win your claim. Every insurance company will partner with a panel of lawyers and if accepted you will be appointed one of these lawyers. Although, once proceedings begin you will be able to select your own lawyer.
Do I need legal expenses cover?
Many businesses do not have the legal expertise in-house required to defend themselves, especially in the complex legal environment. There are thousands of court cases every year relating to businesses and employment matters, with legal costs escalating into the thousands. In many situations, court proceedings are often the only way to resolve a dispute, although proceedings are expensive, long and uncertain. Taking out legal expenses cover is not compulsory, although many businesses choose to take out a policy.
Your business may have access to the funds required to defend or pursue a claim, although it will be much cheaper to take out an insurance policy. Whether you need to defend your business against an employee claim or fund tax investigations, the cost is likely to impact your business. In addition, a legal expenses insurance policy can provide the cover your business needs to pursue a claim. For example, the insurance can help you pursue a claim over contract disputes and recovering unpaid debts.
Examples of business claims
There are many issues which arise when running a business, many of which legal insurance can assist with. Access to legal services when your business requires them can help you overcome many problems, before they impact the business. For example:
An employee dispute escalates and cannot be resolved in-house.
HMRC begins an enquiry into the tax or VAT affairs of the business
A health and safety inspection which leads to a prosecution threat
A boundary dispute with a neighbour is restricting the access your business requires
Adverse publicity is damaging the reputation of the business and PR advice is required
How much does legal expenses cover cost?
The cost of legal expense insurance is relatively low, when you consider the benefits the cover offers your business. In general, the larger the level of cover the more the premium will cost. There are a variety of insurers which will offer low-cost legal expense cover, although you should also check what is included. For example, restrictions may apply in terms of cut off dates for claims.
How do I find the best legal expenses insurance?
There are many forms of business insurance which include legal expenses as an add-on, although individual policies are available. Here at BusinessComparison, we are committed to helping your business find the insurance you need at the best possible price.
To assist you we have partnered with a panel of leading business insurers which provide legal expenses insurance. It is important to remember that legal expenses cover will not provide compensation in the event of a claim. If you are looking to arrange competitively priced business insurance our dedicated insurance team can help.
Simply enter your details into our quick online form and our team will then find a variety of insurance quotes. Whether you are looking for a standalone legal expenses policy or a new form of business insurance with legal cover, we can help. Once we understand your business and exactly what you are looking for, we will help you find the exact policy you need.
If your business is not able to answer the questions, simply give our experienced team a call. We will be able to gather the information needed to arrange bespoke quotes for your legal expenses cover. Once you receive the quotes, you will be able to compare options and find the best insurance at the lowest price.
To ensure arranging your insurance is quick and simple, we will help guide you through the process to obtain your policy. You then simply choose whether you want to pay the full premium up front or across monthly payments.
To find out more about legal expenses cover or other forms of business insurance, please contact our experienced team. Our knowledgeable insurance experts will be able to help you find the policies you require at the best possible prices.
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