Legal Expenses Insurance
Legal Expenses Insurance is insurance cover which provides financial protection for legal costs incurred when making a legal claim or defending a legal action.
Legal Expenses Insurance can be bought "Before the Event", in case a future legal action has to be fought or defended or "After the Event" where a decision has been made to take or defend a legal action and there is a need to insure against the risk of losing and having to pay the legal costs.
After the Event Insurance
An After the Event Insurance policy will be incepted following an incident that warrants legal action.
It provides financial cover for the insured's disbursements and opponents costs, in the event that the insured is unsuccessful in the action and is ordered to pay costs. If successful in the action, the insured will pay a premium, proportionate to the level of cover provided by the policy of insurance.
In some instances such as insolvency, clinical negligence or defamation matter the successful party will be able to recover the premium from the losing party rather than have to pay the premium themselves from the damages awarded.
After the Event Insurance is often, though not exclusively, provided in conjunction with a Condition Fee Agreement (often called no win no fee) to ensure that in the event of the insured party’s claim being unsuccessful they will have not financial costs to bear.
Due to the timing of the cover provided a policy will normally be taken out by the insured following the advice of the solicitor they have instructed
Before the Event Insurance
A Before the Event Insurance policy will be incepted before an incident that warrants legal action occurs and provides financial cover for specific legal costs incurred during the policy’s period.
Generally a before the event legal expenses policy will be included with a collection of other types of insurance cover under a home insurance or motor policy for example.
When a legal action arises for the policy holder it is normally a condition of the policy that the insurer will choose the legal representative for the claimant. The claimant is free to choose another solicitor as their legal representative but this may invalidate their policy.
Before the event insurance policies are normally cheaper as they are often add-ons to existing types of insurance cover and the incident that provides cause for a legal action has not arisen.