29th September 2021
Shopping around, particularly online, for car insurance every year seems to now be common practice. The industry is competitive, and consumers must compare providers annually to avoid their premiums automatically rising year after year.
Many people will be familiar with price comparison websites and going through the process of finding the cheapest deal. Many insurers and comparison sites will offer add-ons such as breakdown or windscreen cover and, amongst those additional products, Legal Expense Insurance.
Providers will advertise that they can provide large sums, often in the hundreds of thousands, if you become involved in an accident to cover you for medical expenses, injuries and legal fees.
Which begs the question, what is Legal Expense Insurance and is it worth paying for?
Legal Expense Insurance (or LEI, sometimes referred to as Legal Cover), is an insurance product purchased, which indemnifies the insured in respect of legal costs arising from disputes. Such disputes can relate to a number of areas of law (such as property or employment), but this article just looks at road traffic accidents (RTAs).
It is possible, just like breakdown cover, to purchase a standalone policy for your legal expenses or for it to be a package as part of your car insurance. You can also have LEI cover that forms part of other insurance products you hold (such as your insurance policy for Home and Contents) that may cover you for accidents on the road. This would be considered to be Before the Event insurance (BTE).
If you purchased BTE Legal Cover, what does this mean for you?
Often you will find that if you find yourself in the unfortunate position of being involved in an accident, your insurance company will select your solicitor from their approved panel, and they will deal with your claim for you. Your insurer will have an approved panel of solicitors in order to control the costs they pay out through agreed payment rates.
It is common that you will not have to pay any fees as a result of this, and no success fee or deduction will be taken from your compensation at the end of a successful case.
What is After the Event insurance (“ATE”)?
When you instruct a solicitor to act on your behalf following an accident and you do not have the benefit of legal expense insurance, sometimes ATE insurance policies will be purchased for you with your agreement to cover such costs if you lose your case. These are usually standalone policies, and you will pay a premium (or several premiums) to cover you for your legal costs in case your claim.
So, is it expensive to bring a claim if you do not have insurance?
Although there are some solicitors that will do this work at no cost to you, the most common form of agreement is a “No Win No Fee” Conditional Fee Agreement type arrangement.
This means that if you lose your case, you pay nothing and, if you win, a success fee will be deducted from your compensation as a contribution towards the solicitor’s fees. The amount of success fee will fluctuate depending on the complexity of your case and how long it takes but it is capped by law at 25% of any past losses (not future losses). Usually, you will not have to pay any upfront costs at all.
So, is there a downside to taking out BTE?
Whilst having peace of mind that you do not need to pay out for legal fees is nice, in reality legal fees are paid from a percentage of the compensation you receive, and you pay nothing up front in any event.
You may also find that you pay with your time and stress by having a panel solicitor chosen for you. The Financial Ombudsman deals with complaints involving legal expenses when things go wrong. In an article posted by the Financial Ombudsman (which you can read by clicking here), they say they generally receive complaints about a number of things involving Legal Expense Insurance, including insurers deciding not to meet the expenses of proposed legal action and an insurer’s solicitor handling a claim badly.
We have seen first hand some of the horror stories as a number of our clients have come to us to put right their claim after having bad experiences with the solicitor that was nominated for them. Take a look at some of the case studies below.
Panel Solicitor did not believe Mr X
Mr X came to this firm after years of trying to get his insurer to help him.
Mr X was involved in a road traffic accident. During the accident, Mr X hit his head and could not recall exactly how the accident had happened. The other driver had given a statement to the police, stating that Mr X was at fault.
Mr X was sure that this could not have been his fault. He remembered the events leading up to the accident and he drove for a living. He was always careful and had never been in an accident before. He was also confused by the damage to the vehicles. The damage did not match what the other driver said had happened.
Mr X’s insurer refused to help him. They decided that there were “no reasonable prospects of success” and the odds were stacked against him. He was injured and had lost out on wages from being off work, but no one would help him. He spent years escalating his complaint to no avail.
Eventually, Mr X found Lamb Brooks. We heard his story and agreed that the damage to the vehicles did not stack up with the statement given by the other driver.
We instructed an Expert Forensic Engineer to examine the vehicles and tell us what had happened. The expert’s evidence was that the accident did not happen how the other driver said it did. The Expert gave evidence about how the accident actually happened which confirmed that the other driver was at fault, not Mr X.
Mr X won his case, receiving compensation as a result.
Miss Z did not want to be left out of pocket
Miss Z had been involved in a road traffic accident and had been assigned a panel solicitor to deal with her claim.
She was not happy about the service she was receiving. She did not feel that she was updated sufficiently, and she always needed to contact them to see what was going on. She did not feel that things were explained to her properly and did not understand the process.
Miss Z’s panel firm finalised the evidence and valued her claim at a little over £5,000.
Miss Z did not agree that this sufficiently compensated her and was not happy with this sum. Miss Z was fed up and asked for Lamb Brooks to take over her case.
Lamb Brooks reviewed all the evidence and picked up that some of Miss Z’s losses had not been included when calculating the settlement sum.
After some further work, Lamb Brooks then settled Miss Z’s case for £55,500, much to her delight.
If Legal Expense Insurance is a policy that is affordable for you, it can be reassuring to know that you have the cover in place. Like any insurance, there can be setbacks when things go wrong so it is important to select your insurer and cover carefully.
It is also important to choose your solicitor wisely and ensure they are the right fit for you. Sometimes deciding to pay a modest success fee is worth getting the right support and advice for your issue.
If you or someone you care about has suffered injury after an accident that was not their fault, then please get in touch to see if we can help you navigate a claim for compensation. You do not need Legal Expense insurance to do this.
Call our team on 01256 844888, email firstname.lastname@example.org or speak to our online chat assistant at any time of day, who can take some initial information and arrange for a lawyer to call you back.
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What to do if You Are in a Road Traffic Accident
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.
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Victoria House 39 Winchester Street Basingstoke Hampshire RG21 7EQ
f: 01256 330 933
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