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What's Included in a Commercial Legal Expenses Insurance Policy?

If you run a business, you may have seen a "legal expenses" section in your commercial insurance policy. But what exactly does this type of coverage provide?

Legal expenses insurance can be a valuable addition to your overall risk management strategy. In this article, we'll break down the key protections offered by these policies.

A legal expenses policy helps pay for legal costs if you need to pursue or defend a claim. Some common areas of coverage include:

  • Tax Protection: This covers representation costs if you end up in a dispute with HMRC, provided there's a reasonable prospect of success. Policies may also cover personal tax affairs of company directors.

  • Employment Disputes: The policy pays legal fees if you're sued over an employment contract or law violation.

  • Contract Disputes: Legal costs are covered for disputes related to contracts like payment terms, scope of work and deadlines. Some policies extend to contractors too.

  • Criminal Defence: Provides representation if you're questioned or charged by authorities like the police.

  • Court Attendance: Reimburses employee costs for attending court as a witness or for jury duty.

  • Property Disputes: Covers legal action over trespassing, nuisance, damage, or property rights issues.

  • Compensation Awards: Pays tribunal-ordered compensation in employment or contract disputes.

Policy terms and exclusions vary, so please review carefully. Common exclusions are disputes arising from psychiatric conditions, stress or intra-company conflicts.

The majority of these policy also include a 'prospect of success clause' meaning if the insurers own Barrister does not believe there is a 51% or more chance of winning the case, if it was to go to Court, that the claim would not be covered.

Benefits often include 'free' legal advice helplines, access to document templates and other services to avoid missteps before litigation. Using these resources can strengthen your ability to claim later.

Premiums can be surprisingly affordable for the breadth of protection and extra services which come with the policy. Check your current policies to see if you have cover. If not, reach out to us to discuss adding this to your business insurance programme. With the right partner, you can gain the legal defence you need without breaking the bank.


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