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Legal expenses insurance

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Legal expenses insurance, also known as ‘LEI’ or ‘legal protection insurance’, is a type of insurance policy which covers policyholders against the potential costs of legal action against an institution or an individual. When something happens which triggers the need for legal action, it is known as ‘the event'. There are two main types of legal expenses insurance, Before the Event insurance and After the Event insurance.

Before the Event insurance

Before the Event insurance, also known as ‘BTE insurance’, is an insurance policy which can be taken out by those wishing to protect themselves against the potential litigation costs, which could be incurred following a future event. These costs often include solicitors’ fees, barristers, expert witnesses, court fees and any legal costs awarded to the other side[1]. Before the Event insurance is generally paid on an annual basis to an insurance company. It is often sold as part of a household or car insurance package. It is also sometimes offered as a benefit to members of a trade union or association.

Examples of Before the Event Insurers

  • DAS Legal Expenses Insurance (largest global provider of legal expenses insurance)[2]
  • AXA


After the Event insurance

After the Event insurance, also known as ‘ATE insurance’, is insurance which can be taken out after an event, such as an accident which has caused an injury, to insure the policyholder for disbursements, as well as any costs should they lose their case[3]. After the Event insurance is usually used by people who do not have Before the Event insurance. If the claimant loses their case, then the insurance company will pay their opponent's legal costs and expenses. Solicitors who take on, for example, personal injury cases on a 'no win no fee' basis, may require their clients to take out After the Event insurance so that costs will be covered if the case is lost. This insurance is often offered by solicitors and claims management companies. Benchmark Insurance[4] is a type of After the Event Insurance.

Accident victims should speak to a solicitor for advice on making a claim and after the event insurance. National Accident Helpline is an example of a personal injury claims firm that use ATE insurance when they put people in touch with specialist solicitors to handle their claims.

Lack of awareness

Research by the Ministry of Justice in October 2007[5] found that despite 59% of the population having legal expenses insurance, less than one in four consumers had ever heard of Before the Event (BTE) or After the Event (ATE) legal expenses insurance. The research estimated that 28m adults have Before the Event insurance, mostly as an add-on to another insurance policy.

References

  1. ^ Community Legal Advice
  2. ^ How to pay for some justice: Maclean's Magazine
  3. ^ Department for Constitutional Affairs
  4. ^ Benchmark Insurance
  5. ^ Ministry of Justice

Bibliography

  • "National Accident Helpline". National Accident Helpline. Retrieved 2009-05-28.
  • "Claims Management Regulation". Ministry of Justice. Retrieved 2009-05-28.
  • "Benchmark Insurance". National Accident Helpline. Retrieved 2009-05-28.
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