For example, a client may claim that his financial advisor did not inform him of a deterioration in economic conditions and that he, the client, could have avoided this loss. If the liability insurance of the consulting company does not cover legal costs, the company may consider taking out legal expenses insurance. Expenses are the fixed costs incurred by a lawyer in preparing and pursuing your case. These are usually billed to the client and are added to the lawyer`s fees. Typical expenses in a case are: Legal fee insurers cover costs (e.g., attorneys` fees and lawyers` fees) incurred in the event of an unexpected legal incident. These costs usually include lawyers` and court fees, witness fees, translation costs or experts` fees. According to national legislation, legal expenses insurers also provide legal services and represent policyholders amicably or in court. The policyholder is usually protected in disputes in various areas of law such as contract law, labor law, consumer law and family law (including divorce in rare cases). The premium is normally paid annually. Legal expenses insurance has a history of 100 years. [2] The concept was born in 1911, when members of the Automobile Club de l`Ouest were offered several additional services, including protection in the event of fines or litigation before police courts. This basic legal protection was later extended to road accidents and led to the first legal protection insurance in France, offered by “La Défense Automobile et Sportive (DAS)”, founded in 1917. La Défense Automobile et Sportive (DAS) offered motorists and athletes legal services and reimbursement of legal costs.
[3] The LEI is generally used in large companies, but it is essential for businesses of all sizes that are at risk of legal action or to offset the costs of filing a complaint against a customer. Commercial Legal Expenses Insurance (CLEI) is a similar type of legal protection insurance for small and medium-sized businesses. The LEI can sometimes cover legal costs related to a company`s intellectual property and trademark protection. In the European Union, precise rules govern legal expenses insurance and explicitly specify how insurers must organise their activities and manage claims. These rules are contained in the Solvency II Directive (Articles 198 to 205) [5] The Japanese market had a gross written premium of around €600 million in 2016, making Japan the fifth largest market after Germany, France, the United States and the Netherlands. In 2016, legal protection added to motor insurance accounted for 90% of the market share; Indeed, autonomous insurance has only been introduced in the last decade. The European legal expenses insurance market is well developed, with Germany, France and the Netherlands accounting for 43%, 14% and 8% of the market respectively. According to a survey commissioned by RIAD and conducted by Ipsos in August 2017 in Germany, France, Ireland and the Netherlands[7], more than a quarter of respondents have used litigation in the last 5 years.
The responses showed that people in all 4 countries are mainly concerned about the cost of litigation, which is especially true in Ireland (50% of respondents) where attorney fees are extremely high. Compared to other countries, Dutch citizens are particularly reluctant to waste time and energy (33%), while Germans are more afraid of being deprived of their rights (27% compared to 18% in Ireland and only 10% and 8% in France and the Netherlands). Added to this is the freedom of Member States to regulate differently from the EU on certain issues, for example to require insurance for individual farms that grow genetically modified crops and intend to sell them to other EU Member States. [8] The Canadian market has grown rapidly and many companies (some domestic, some American) offer legal expenses insurance. In 2016, the gross legal expenses insurance premium was approximately C$56 million; almost twice as many as the previous year. To further promote access to justice, the Canadian Bar Association partnered with DAS Canada, a licensed legal protection insurance company in Canada, in 2013. [9] In Quebec, legal protection insurance is supported and promoted by the Barreau du Québec. [10] Before purchasing legal expenses insurance, a company should review its current coverage to determine which risks are fully covered and to identify areas where there is a gap in coverage. Conditional insurance is more prevalent because an insurer can prove that the claimant is less risky. The amount of the premium for this type of protection depends on the industry and the risks to which this company is most exposed.
Certain types of policies may also cover routine legal advice and legal fees related to the protection of trademarks and copyrighted material. Legal expenses insurance should not be confused with coverage, which is often included in liability insurance. The purpose of third-party liability coverage is to protect the policyholder against losses resulting from negligent acts or omissions resulting in damage to another person, his property or interests. Therefore, the main purpose of liability insurance is to protect others against the consequences of the policyholder`s fault. In other words, liability insurance reimburses the other party for damage caused by a negligent act of the insured. It does not intervene to protect the property and interests of the policyholder, unless it is liable for damage suffered by the other party. It also assumes the legal representation and defence costs of the policyholder if the policyholder is sued for an accident because the loss of the liability claim would be detrimental to the liability insurer, as it would have to bear the financial consequences. However, the liability insurer does not help the policyholder to obtain justice as a plaintiff if he has suffered damage. This form of insurance is the most widespread. It covers those who want to protect themselves against possible future claims, and it is purchased before the prospect of litigation.
It supports the policyholder either by providing legal advice or even by representing him before or outside the courts. It also covers the costs and expenses of legal proceedings. The amount of coverage depends on the type of contract and is specified in the insurance conditions. If the policy is sold as part of home, auto or travel insurance (e.g., supplemental insurance), it only covers disputes closely related to the purpose of the primary coverage (e.g., domestic claims such as disputes with neighbours or motor vehicle disputes in the case of motor vehicle legal expenses insurance). If legal expenses insurance is taken out as an independent and autonomous insurance product (stand-alone coverage), the range of services, scope and scope of coverage are significantly broader. Sometimes legal protection insurance is offered as a benefit to members of a trade union or association. According to a survey commissioned by the Dutch Ministry of Security and Justice in 2016, lawyers who provided services through legal protection insurers performed best both in terms of perceived quality of services and based on peer review. [11] Business Legal Expenses Insurance (LEI) is a form of Legal Expenses Insurance (LPI). LEI coverage protects a business against the cost of self-defense in case someone takes legal action against it. It is intended to protect against costs arising from the actions of third parties, but can also cover costs associated with litigation that the insured person conducts against others.
These costs can include attorneys` fees, witness fees, court costs, or even the cost of hiring experts. In 1928, an automobile club in Germany, the “Deutsche Automobil Schutz” (D.A.S.), increased dues to create a similar pool to pay for the defense of its members accused of traffic offenses. The general public then inquired about participation in the program. At that time, the idea of insurance accessible to the general public was established.
