Is Employer-Sponsored Legal Insurance Worth It?

The Basics of Legal Insurance

A policy for legal insurance, also called legal expense insurance or protection insurance, protects its holder against potential litigation costs. For example, when a business is the policyholder, legal insurance protects that business from having to absorb the full expense of lawsuits filed by or brought against the business—costs that can quickly add up between attorneys’ fees and potential damages.

This type of legal protection for business can be extremely valuable, especially if your company is operating in an industry that is highly susceptible to lawsuits, such as the manufacturing of a product that could potentially cause injury.

Still, because all types of business could be subject to lawsuits, legal insurance is worth considering no matter what your company does. Some of the most common types of claims businesses face include:

  • Hiring, firing, wage, and other employment decisions
  • Discrimination and harassment claims
  • Other disciplinary actions taken against employees
  • Intellectual property claims, such as copyright, trademark, and patent infringement
  • Breach of contract
  • Personal injury and tort claims
  • Criminal charges

Because there is such a broad range of circumstances in which a business could face litigation, even businesses that don’t have an obvious risk for lawsuits may still desire legal insurance for unforeseen events.

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Legal Plans by Other Names

Legal plans go by many names. These include "legal protection insurance" (LPI), "prepaid legal plans" (PPL), or just plain legal insurance.

Before you buy a plan, you'll want to ask about access to services. You should also find out whether there are any exclusions, so you can be sure what you're buying. Only when you know what is being offered can you accurately evaluate the cost.

Life insurance for partners

If you’re not the ‘breadwinner’, is life insurance worth it? Life insurance is not just for high earners, it can be invaluable for a range of households. If you look after the children at home, that takes time, energy and comes at a cost. Ask yourself, could your family manage if you were no longer around? Would your partner have to take time off work to look after the children? Your life insurance policy could help with some of these worries by paying a cash sum which could be used to help towards the mortgage for example, or covering everyday living costs such as childcare.

If you have a partner or spouse, you can decide whether to get single or joint life insurance. The latter pays out upon the death of the first insured person, at which point the policy ends. However, you can have two single policies as a couple, which means that even after the first death, the surviving partner still has their own policy.

Summary

  • It covers your legal costs. It’s very useful if you don’t trust your landlord or your employer.
  • It’s a luxury. It’s not essential, but it’s good to have. Liability insurance is a lot more important.
  • You must get it before you need it. If you already have a problem, it’s usually too late.
  • You choose what it covers, and control how much it costs.
  • It rarely covers certain things like intentional crimes, divorces and immigration.
  • There are cheaper options. It depends on what you need.

What Do Legal Insurance and Prepaid Legal Plans Cover?

What your legal insurance will cover varies from plan to plan. Many of them, though, will cover the same basic types of counsel and legal representation. Here are examples of coverages found in various plans:

  • Buying and selling houses
  • Refinancing, consumer or creditor problems, avoiding bankruptcy
  • Tax questions
  • Adoption 
  • Single parent legal issues and questions
  • Help with contracts and legal documents
  • Preparing legal documents or letters
  • Tenant rights
  • Making a will or living will
  • Estate planning
  • Home improvement or contractor issues
  • Consumer protection
  • Traffic tickets

Each company will have its own limitations and exclusions. Be sure to get the full details about waiting periods and eligibility for any of the above services before you buy a plan.

What to Look for in a Policy

Not all legal insurance plans are created equal. High deductibles or a large number of excluded services can put one provider ahead of another when choosing the best legal insurance.

Affordable deductibles. Legal insurance deductibles can range from $0 up to hundreds of dollars. In the latter case, consider the coverages and monthly costs carefully. You may find that most smaller claims aren’t covered at all due to the deductible.

Wide attorney network. Choice is good and a wide network of attorneys makes it more likely that you’ll find a specialist in your area. Some plans even allow out-of-network attorneys, but additional costs may apply.

Broad coverage for different types of legal matters. Some types of legal matters that aren’t covered by one provider may be provided by another — but perhaps with a waiting period requirement. A broad selection means better coverage because you often don’t know beforehand which services you’ll need. Beware of plans that place limitations on all but a few types of legal matters.

Full coverage compared to reduced costs. Some plans only offer reduced pricing and don’t provide full coverage or only provide full coverage for a few types of legal matters. The tradeoff is that discount plans can be more affordable on a monthly basis than full coverage plans.

How does a legal insurance plan work?

Contact your insurer to get in touch with a network attorney

When you have an active insurance plan, you can use the assigned toll-free number on your membership card or go online to get in touch with an intake specialist. They will then connect you with a local network attorney that specializes in legal issues affecting you. 

Using a network attorney means you won’t pay legal fees as long as the plan fully covers the issues in question. A policyholder may also get discounted rates on non-covered legal services.

Hire a lawyer outside your network if needed

In some cases, you may have no other option but to hire a lawyer outside the network. 

With an out-of-network attorney, you’re likely to pay upfront for the services. The good news is that the money spent here is recoverable, as you are allowed to seek reimbursement from the insurance provider. 

However, keep in mind that insurers usually don’t pay out-of-network attorneys more than what in-network attorneys receive. If you exceed the set plan limit, then the difference will be an out-of-pocket expense. 

Therefore, before working with an out-of-network attorney, it’s imperative to understand the maximum amount your insurance can cover in any legal matter.  

Is Home Insurance Legal Cover Worth it?

Legal action can be expensive, and should you find yourself in need of a solicitor, Home Insurance Legal Cover offers you the reassurance that these fees may be covered, which makes the small additional premium for this type of cover generally worth it. It is important to note that in the Intelligent Insurance home insurance policy, you are covered up to £25,000 for some incidents automatically, but in the event that your legal bill exceeds this amount you would not be covered. By upgrading to the Plus cover, you have peace of mind that you are getting up to £100,000 of legal expenses cover which should cover a lot of the scenarios described here that rack up the legal bills.

If you’d like a new quote for home insurance, or would like to add Family Legal Plus cover to your existing policies, get in touch with one of our helpful advisers via online chat or by calling 0333 11 11 10.

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Does an insurer pick a network attorney for policyholders?

No, when you get in touch with an intake specialis

No, when you get in touch with an intake specialist, they will provide a list of network attorneys who practice in your area of interest. It’s up to you to review the lawyers’ profile and then decide the ideal candidate to represent you. Insurance companies often partner with knowledgeable lawyers who are fully licensed and have a good standing with local regulatory agencies. And because of that, you wouldn’t spend a lot of time before finding a match. 

Who Should Get Legal Insurance?

Most households don’t need a lawyer on a regular basis. However, when you do need an attorney, the cost can be hundreds of dollars per hour and legal fees can add up quickly. Purchasing legal insurance can be an affordable way to reduce legal costs when you do need a lawyer’s help.

Consider the available coverages carefully. If your goal is to provide general consumer protection and contract assistance, a legal insurance plan can be a great value with most plans priced under $1 per day. However, a legal insurance plan may not be much help in contested divorces, custody issues or even DUI cases due to coverage limitations and exclusions.

The average household spends much more each month on a gourmet coffee or cable television than the cost of a legal insurance plan, which paints the cost of legal insurance in a different light. View legal insurance for what it is: a limited insurance policy that will cover many legal needs — but maybe not all. If you only use your coverage once, the coverage may have paid for itself in savings.

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What is After the EventInsurance?

After The Event Insurance might be needed if you did not have a Legal Expenses Insurance or Motor Legal Protection policy in place before a road traffic collision occurred.

The cost of this policy is significantly higher than if you had purchased Legal Expenses Insurance upfront because you are asking for cover after the accident has happened.  A solicitor will usually recommend a particular After The Event insurance policy when you enter into an agreement with them.

The types of losses After The Event Insurance usually covers are:

  • The legal costs the other side has incurred which you are responsible for because you did not win your case, you have unreasonably rejected an offer to settle before court, or the case was abandoned
  • Your own unrecovered disbursements e.g. the costs your own solicitor has incurred in preparing for the case (including court fees and medical reports)

Some people who suffer Personal Injury can find the prospect of paying hundreds of pounds for an After The Event Insurance policy off-putting.

Did you know that for £15 a year you can purchase Legal Care Plus from RAC which insures you for up to £100,000 of legal costs for Uninsured Loss Recovery including Personal Injury following a road traffic collision and other types of accidents?

If you have this policy in place before the road traffic collision occurs, you should not need to purchase an After The Event Insurance policy either. 

* Our Legal Care Plus cover is nearly 50% cheaper than most legal expenses insurance policies typically purchased as an add-on to a motor insurance policy. Source: Comparison of car insurance premiums with add-on Legal Expenses Insurance completed on the 23 February 2018 using www.comparethemarket.com. Each policy will cover specific claims to different degrees. Restrictions may apply.RAC Legal Care Plus is arranged and administered by RAC Financial Services Ltd (Registered No 05171817) and provided by RAC Insurance Ltd (Registered No 2355834). Registered in England; Registered Offices: RAC House, Brockhurst Crescent, Walsall WS5 4AW. RAC Financial Services Ltd is authorised and regulated by the Financial Conduct Authority in respect of insurance mediation activities. RAC Insurance Ltd is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

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