What do you get with a general legal expenses policy?

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By Jack Durrant BA (Hons) ACII, Associate Director > So, what’s the deal with legal expenses and insurance policies? The simple answer is that they can form a part of some commercial combined policies and sometimes there is a different insurer linked to it, which are often more specialist in providing these covers and services. Take a look at your insurance policies and you might see in your own insurance policy a section called “legal expenses” and then a listing of various sections of cover. These sections can be useful and depending on the risks you and your business need to transfer, can perform some important roles in your programme.

You should be aware that many of these policies have lengthy yet necessary terms and conditions (T&Cs). There are many reasons for this, and it’s worth speaking to your broker about the conditions relevant to the sections of the policies, ensuring that they perform as you would expect in the event of a claim. There are often some exclusions too, including, but not limited to, litigation arising from psychiatric conditions or stress, intra company disputes (between subsidiaries of a common company for example), and breach of restrictive covenant.

• Tax protection: Limits under this section can vary, and many of the policies will pay for the costs of representing the business in front of HMRC where there is a reasonable prospect of success. Some policies also extend to cover a director’s own tax affairs with HMRC.
• Employment disputes: The policy will pay for legal representation for you in the event that your business is taken to court over a dispute under contract of employment or over employment law for example.
• Contract disputes: (some policies can extend to cover contractors too) Similarly to contract disputes, this will pay for legal costs under a dispute with another party on many elements of a contract including time scales, payment, detail of works to be carried out, and dates.
• Criminal defence: This can be utilised for representation under a prosecuting authority such as the police, even under caution.
• Court attendance costs: This covers the costs of an employee when they are called away to court (deducting anything otherwise recoverable from the court). For many policies this includes being called as a witness or for jury duty.
• Property disputes: Examples of this include; where a party is trespassing on your property, nuisance incidents on your property, defence of another’s claimed right of way over your property, your use of a right you have over another’s property as recorded in the title documents of your property and pursuing another for physical damage to your property that is not covered on another policy.
• Compensation awards: For example, under an employment or contract dispute whereby there is an order given to pay compensation by a tribunal.

There are variables of course, which depend on what options for cover are selected. Legal cover can be more affordable than you might think, and with the breadth of cover there can be useful elements for many businesses in the policies.

We recommend that you check the wording to your policy. And bear in mind that some offer legal advice lines, document templates, and a host of other services that they expect companies to use to benefit from the covers later (this is to avoid missteps which could hinder potential litigation later on). All of these additional services can be very handy and offer customers a boost to benefits when they consider purchasing a policy.

Our final piece of advice is to check whether you have legal expenses cover. If the answer is “no” then please reach out – Howden can place legal expenses policies in isolation.