Commercial Legal Expenses Insurance – just an extra cost or a real benefit

Commercial Legal Expenses Insurance as an addition to a Business Insurance policy may have seemed an unnecessary expense in the past, but a significant rise in litigation is causing an upsurge in the number of businesses requesting cover.

Whilst your Business Insurance policy will generally cover the legal costs and assistance to contest a claim of negligence which has caused damage or injury, it is unlikely to cover employment disputes, contact disputes and importantly, investigation by the VAT and TAX man, these latter inquiries can be expensive, and even if you are successful then no costs can be recovered from Inland Revenue and Customs. For general business related disputes, access to a specialist lawyer is often needed to argue a case and your normal solicitor may not be able to offer this service. The cover provided by Commercial Legal Expenses Insurance can help with many of these costs and provide appropriate legal assistance in person and through help lines.

Some insurance policies now include Legal Expenses cover as standard or as an optional extra, and this cover is usually provided by the same insurer as the main cover. Whilst this may seem beneficial, if you have one of these policies and there is a dispute with your insurer for say, an aspect of a claim under your policy (i.e. dispute of the claim amount or voiding of a claim), then, as the legal expenses section is part of that policy, it won’t operate. A Legal Expenses policy taken out with a separate insurer will of course act for you against the other insurer in this case.

Beware The Small Print

‘Beware the small print’ is a common phrase used by people when talking generally about Insurance – but why then do we ignore this age-old adage when buying insurance online?

In this dot.com comparison site age, how many realise until it is too late that the policy they purchased, does not provide the cover expected. Unfortunately, when bought on-line, the full policy wording may only be available after purchase.

We are being conditioned by advertising to think that ‘cheaper is better’ these days – but to get a lower price, insurers make assumptions about you (one size fits all). A reduced number of questions are asked in an online quote form, because the Insurer wants to keep your attention, and many assume that because a certain question has not been asked, it does not matter – but this is not the case.

For example, when buying Home Insurance or Landlord Insurance it will state somewhere in the statement of fact that you accept the property is not near a river or watercourse, cliff or harbour. You may not realise the question has been answered NO, because it is one of many questions that default to NO and is automatically accepted when agreeing to the quote. If you don’t read the full ‘Statement of Facts’ before buying you won’t know – and what if this should be answered yes in your case? – you potentially have an invalid policy.

Alternatively get professional advice, as this is still the safest way to buy insurance. A Professional Insurance Broker will ascertain your demands and needs and ask the appropriate questions, avoiding the pitfalls of online question sets with defaults. I’ll finish with the other wise adage ‘you get what you pay for’.