Legal expenses insurance Legal expenses insurance problems

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Alternatives to legal expenses insurance include legal aid, trade union benefits and after-the-event insurance

In the past, legal expenses insurance was often badly sold. While LEI benefits were emphasised, details of limitations and exclusions were only addressed in the policy documentation – often not all that clearly. Insurers need to be clearer at explaining how their LEI policies work.

No guarantee legal insurance will cover your claim

Legal expenses insurance (LEI) doesn't operate in the same way as a dispute would if you instructed your own lawyer. Simply contacting your insurer will not guarantee you get a lawyer to pursue your case.

For a claim to be taken up, your insurer must be satisfied that you have a reasonable or better than average chance of winning your case at any time, not just when the claim is first raised. If new evidence comes to light, funding for your lawyer could be dropped.

Choice of legal representation

Even though insurers are allowed to appoint a lawyer from their own panel, you still have the right to select your own solicitor once legal proceedings have commenced.

However, some home insurers have clauses that limit their liability to the hourly rate they pay their panel solicitors (which are likely to be way below the industry’s agreed rate). Many independent legal firms won't be able to take on the work required at this rate. 

Peter Daley, an employment law solicitor at Bindmans LLP told us: 'Would-be claimants are therefore left with either paying for their own choice of representation, the opposite of the reason why they bought LEI in the first place, or being denied the right to choose their own legal representation altogether.'

A High Court judge ruled in October 2011 that rejecting a customer's decision to instruct their own lawyer on the basis of cost would not be allowed. This would seem to pave the way for a fairer approach to choosing your own lawyer in LEI claims.

Alternatives to legal expenses insurance

After the event insurance

More expensive than LEI, it's run by solicitors and covers a specific claim. It often operates on a conditional fee arrangement, typically no-win, no fee.

Legal aid

This provides advice and legal representation for some civil cases. It doesn’t cover personal injury and getting it will depend in part on your financial circumstances.

Savings

The cost of defending or pursuing a court claim can run into tens of thousands of pounds. But if you have money put aside in a savings account for a rainy day, this could be an option. But if you don't and want to start saving, the Which? Money Compare tables let you search hundreds of savings accounts and cash Isa deals from providers large and small so that you can find a good home for your savings.

Trade unions

Members of a union may have access to legal assistance for all manner of claims, including employment issues and personal injury.

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Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.