What is Legal Expense Insurance & why do I need it?

January 20th, 2015

Most Canadians carry typical home/tenants/condo unit owner’s policies providing coverage for their physical assets (fire, water damage, etc) and liability coverage against third party claims such as a slip & fall on one’s premises/property.

But what if you were the third party?

What if you were the one who suffered the slip and fall on someone else’s premises? What if you hired a contractor who left disastrous work? What if you disagree with your auto insurer’s stance on the settlement of your auto claim? What if you were wrongfully dismissed without cause? This and many more situations are common, and usually brushed off as horrible luck and many hope that by pursuing costly litigation against the at fault party – one may recoup some financial compensation.

However, as many may already know, one’s policy does not respond to 1st party claims such as these, and the legal fees alone can deter individuals from pursuing legal action – even when they know they are in the right to pursue legal action.

According to DAS Legal Canada † – the average cost of two day civil trial in Canada is currently estimated at $18,420 CAD and climbing.

This is where Legal Expense Insurance comes into play – not only does it ensure client’s covered (see list) & reasonable legal expenses are covered up to policy limits (see list below), but most leading carriers provide unlimited access to legal advice 24/7 helplines and connect clients with a vast legal network to assist in the pursuit of legal action. However, it is important to note that coverage for legal costs/expenses is not unlimited (ie: there is no coverage for family court or criminal/DUI), and legal expense usually responds specifically to the following legal actions:

• Employment disputes;
• Contract disputes;
• Property disputes;
• Bodily injury claims;
• Tax issues;
• Legal defence;
• Total loss valuation disputes arising from motor vehicle accident;
• Statutory Accident Benefit claims against your automobile insurer;
• Driver’s licence protection
• Issues arising from driving or being a passenger in vehicles owned by another person;
• Court attendance expenses.

Citation: DAS Legal, 2014
† http://www.das.ca/Products-Services/DASlive-drive.aspx

Further limitations such as 30 day waiting periods, employer disciplinary hearings, drug/alcohol related offences and other exclusions do apply; as such, it is important to review these policies and the specific legal actions they do provide legal expenses for. Nevertheless, many of the outlined instances legal expense coverages does respond to, is well worth a look in reviewing and seeing whether this would be beneficial to one’s risk management and potential legal strategies.

Despite this coverage having been around in Europe since 1917, it is fairly new concept to the North American market – for both personal and businesses. However, for both personal & businesses it is readily available at brokerages such as ours, and is a cost effective tool in developing one’s personal and professional risk management and legal strategies.

As individuals realize not only their legal rights, but the financial impact and implications that legal fees alongside the wrongful action themselves may cause – it is important to ensure that as a wronged party, one is not deterred by the potential legal fees and expenses when pursuing a rightful legal action. A legal expense policy may assist in facilitating one’s choice to pursue legal action, and not have the concern or worry of retainer fees, lawyer fees, and the overall anxiety of whether or not an action should be taken when resources (such as the 24/ 7 legal advice lines) provided by such policies can help ease and facilitate many of these overwhelming concerns.

For further information of how a legal expense policy may benefit you personally or professionally (for business purposes), do not hesitate to contact your local broker today.

Blog Author: Samantha Millar, CAIB, ACS | Marketing Broker | Rogers Insurance Ltd.

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