What is Legal Insurance? All You Need To Know
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Legal insurance also called legal expenses insurance is a type of cover that helps to pay for various legal fees. Policyholders usually get legal advice and representation from experts in this area, as well as financial coverage for costs to launch a legal action.
This means that irrespective of whether you decide to sue or someone sues you, this insurance caters for any costs that are incurred in the course of legal process.
History of Legal Expenses Insurance
Legal expenses insurance originated in Europe during the early 1800s when Napoleon’s war was still ongoing, while modern policies have their roots in World War I in England. In the 1990s it became popular in North America due to an increased awareness among both business owners and individual customers who were consumers or brokers dealing with insurance covers. Currently, almost 14% population of the US holds some form of legal expenditure policy, with higher percentages being found among business owners.
Types of Legal Insurance
There are two types of legal insurances; before-the-event (BTE) and after-the-event (ATE).
Before-the-Event Insurance (BTE)
BTE insurance is often purchased by small and medium-size companies without internal lawyers but can also be taken out by individuals. It anticipates unpredictable future developments leading to possible legal impact on either person or organization. Such a policy can include worker disputes, tax inquiries/audits, defense for criminal cases; safeguarding property; health and safety inspections resulting into prosecutions. Legal costs vary considerably hence BTE policies help in covering these expenses while ensuring immediate access to law support.
After-the-Event Insurance (ATE)
ATE insurance comes after filing a claim legally. Besides paying back attorney bills charged on behalf of the insured coverer other than such costs imposed by court against policyholder were also included on ATE plan. A lot of law firms offer ATE policies to their clients so as to minimize chances of losing in a trial and having to pay costs for the other side.
How to Buy Legal Insurance
In the United States and Canada, legal insurance can be purchased from licensed brokers or legal firms. Many insurers provide access to a full service legal document center, 24/7 telephones, among other legal services with limits that range between $100,000 and $1,000,000. Additional policy riders may be written-in so as to cater for certain types of legal troubles such as those connected with company owned automobiles driven by employees.
Policy benefits should be compared when choosing an insurer which guarantee 100% paid-in-full coverage, personal attendance vs. phone assistance of lawyers and certified advocates. Also it is important what is encompassed by the phrase “legal matters covered” and “legal matters not covered”. Majority of policies comprise telephone consultations concerning law questions.
The Bottom Line
Legal insurance might come in handy especially for small-sized businesses with no internal counsel. It provides professional advice on law issues plus cash indemnity from future incrimination charges even if the insured sued or presents a suit against someone else.
Individual clients may require underwriters for their legal cases currently running or awaiting court decision; otherwise they may never need this type of cover at all. There are individuals who could feel relieved after acquiring such coverage knowing that the total cost attached to hiring a competent lawyer could be exaggeratedly high for them. In order to know if you need one, then go talk with a specialized insurance agent or local attorney about the pros and cons depending on your own situation.
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