Legal expenses insurance is often termed “family legal protection” and may still be included either free or for a small additional premium for a few more months at least in your household or motor insurance policies. These policies pay for the fees incurred by your solicitor in acting for you in a various types of legal claim and a type of claim often included is a personal injury claim. Some credit cards also have legal expenses insurance.
There are significant problems with this insurance but under the right circumstances it can be of some use. Here are the problems:-
- The first point to be aware of is that originally the insurer wanted you to claim on the insurance because it could sell your details for several hundred pounds to one of its panel solicitors who were very likely to be at the other end of the country – this money making scheme proved very lucrative for many insurers. However, on the 1st April 2013 the payment of a referral fee in order to obtain the details of a person wanting to claim compensation for personal injuries was made illegal. As such may insurers are linking up with law firms in order to get around the ban.
- The second point is that this insurance is going to start getting more expensive as it no longer becomes a license to receive back-hand payments from law firms. It is going to have to be sold at a realistic price and take up by policy-holders will start to decline.
- The third point is that the insurance company will attempt to be very persuasive and try to avoid you consulting a local firm – but this is not for your benefit – the motivation here is the desire to avoid paying normal fees – the firms who are on the insurers’ panel are likely to have agreed to reduce their normal fee rates
- The fourth point is that the panel solicitors, because of the reduction of fee rates, frequently can only afford to put less experienced lawyers on to the case, perhaps clerks or para-legals.
- The fifth point is that the insurer will ignore your legal right to appoint your own solicitor from the outset ( with one exception concerning breakdown insurance) and your legal right to insist that the insurer underwrites the fees – see Regulation 6, Legal Expenses Insurance Regulations, 1990 ( click on this link to see for yourself LINK to Regulation) Indeed, one particular insurer has established a very successful business model by flouting this fundamental point with full co-operation from the Ombudsman but now European case-law has confirmed that freedom of choice arises at the outset and not when the claim is going to be issued at court.
If you prefer face to face meetings with your solicitor, and the ability to call in to drop off documentation, etc., or to see how your case is getting on, the insurance company’s choice of lawyer will not be for you.