What is Home insurance legal cover?

But what does it cover and how much are you covered for? Find out all about home insurance legal cover.

Also known as legal expenses insurance (LEI) or family legal protection, home insurance legal cover can be added to your home insurance policy for around £25 (although occasionally it is included for free).

While a home insurance policy will cover you in case of fire, if you are burgled, or your home is damaged, home insurance legal cover is there to cover you for any legal proceedings you may have to pursue. 

And while you may assume the legal advice and protection is limited to issues involving your property, the range of situations covered is actually surprisingly wide, and includes employment disputes, tax investigations and consumer rights infringements.

So, if you are wrongly dismissed at work, you find yourself the subject of a tax investigation or the sofa you ordered arrives damaged and the retailer refuses to refund you, legal expenses insurance could cover the cost of legal proceedings. 

This type of insurance can also be used to seek compensation if you are injured or have suffered a loss where the other party denies responsibility, or if you are sued because someone is injured or killed while at your home and you must defend yourself from blame.

How much cover is provided?

The cover provided will depend on the situation and can be as simple as providing access to expert legal advice, to hiring a solicitor to take a claim to court and covering the costs in the event of a claim. The limit to how much you can claim under the policy will depend upon the individual insurer, but is usually £50,000 to £100,000.

When you consider that hiring a solicitor can cost around £300 per hour, paying £25 on top of your annual home cover premium for legal expenses insurance can be very good value for money. 

What does it cover?

In general, home insurance legal cover will cover the pursuit, or defence of legal proceedings relating to your home, employment, death or personal injury. It can also protect you when you have entered into a contract for the sale and supply of goods and services.

Some examples of situations covered include:

Property disputes

Disputes with neighbours over damage to their property that they allege is your fault (such as your tree falling into and damaging their home or garden). Loss of natural light caused by your extension or plant growth. You may also be covered if you find yourself in a dispute regarding the location of boundaries between two properties.

Tenancy disputes

If you rent your home and have a dispute with your landlord regarding your tenancy agreement, legal insurance could cover you, should you need to pursue or defend legal claims.

Contractual disputes

Your legal protection can cover you if you end up having contractual disputes with surveyors, builders or other professionals and provide legal advice if a tradesperson has carried out poor work in your home.

Compensation claims

If you are injured or suffer a financial or property loss and the other party denies responsibility.

Employment disputes

If you should find yourself in a dispute with your employer (such as you believe you have been unfairly dismissed) your legal cover could cover the costs of a solicitor and the costs arising from going to tribunal.

Tax issues

Should you be investigated by HM Revenue and Customs (HMRC) for tax issues and require representation, legal expenses insurance could cover the costs relating to a formal enquiry.

Consumer rights

In addition, your consumer rights could be protected. For example, if you were to order an item for your home that arrives damaged and the retailer refuses to refund you, your legal expenses insurance could cover the cost of legal proceedings. This can also apply to things you have hired for your own private use.

Death and personal injury

Legal protection can also cover the costs of taking legal action due to your death. It can also cover legal representation should you get injured and the other party denies responsibility, or should someone be injured in your home and pursue a claim.

In addition, home insurance legal cover can replace lost wages if you have to carry out jury service and the costs and expenses if you are the victim of clinical negligence, which can include cosmetic treatments.

Most insurers will provide a free, 24 hour legal helpline and may offer discounts on services such as conveyancing.

What isn’t covered?

You can’t claim for a case that started before you took out the policy or for legal costs that you paid before your claim was accepted.

Claims must be worthwhile and so if the amount under dispute is under a certain value it won't be covered.

You won’t be able to claim for work ordered by the government or local authority.

If you are trying to claim for a matrimonial dispute or libel case, these are not covered.

You will also not be able to claim for motor vehicle injuries where you were driving.

The main benefit of taking out home insurance legal cover obviously has to be access to legal advice and representation for just £25 a year. This really can save you a significant sum of money depending on the sort of dispute you use the cover for and whether it goes to court. After all, even if you win your case, legal fees can still be very expensive and you could end up paying for expenses such as medical reports, barrister fees or even the legal costs of your opponent.

Having a 24 hour legal advice helpline can also be invaluable, simply for discussing your situation and finding out where you stand to help you decide whether to take things further. 

You may be entitled to professional advice on any personal legal or tax matters as well as have access to a useful legal documents service, which could help you draft an application to challenge a parking ticket, for example, or apply to your employer for flexible working.

One drawback of home insurance legal cover is that there are limitations on what you are entitled to. For example, insurers will usually insist on appointing a lawyer from one of their associated firms for you, which might mean you are represented by someone not as experienced as you would like. 

Insurers also need to be satisfied that your case has reasonable prospects of success.

Reasonable prospects of success

If every claim were followed through, no matter how bleak the expected outcome, insurers (and legal services) would be snowed under and never make any money.

For this reason, insurers will assess your claim, often in conjunction with their panel of solicitors, to decide what the chance of winning the case would be. 

If a case does not have at least a 51% chance of being successful, it can be described as having no ‘reasonable prospects of success’. This clause allows insurers to drop, or refuse to commence with a claim. What’s more, if your case should be taken on but new evidence comes to light, funding for your lawyer could be dropped.

If you were to disagree with the outcome, you can ask the Financial Ombudsman to investigate provided you have independent evidence from a qualified, comparable lawyer to support your view.

While the costs of legal representation can be exorbitantly high, if you don’t need it you could consider paying for this cover to be unnecessary. What’s more, depending on your circumstances, you may have access to legal help from elsewhere.

Legal expenses insurance is often added to car or motorcycle insurance policies. In addition, you may find legal cover included as one of the benefits from your employer. 

Legal aid provides advice and legal representation for some civil cases, although you will need to prove that the problem is serious and that you cannot afford to pay for legal costs.

Trade unions often provide their members with legal assistance for employment issues and personal injury claims. Finally, you could consider using your savings, should the need for legal advice arise.

Before the event insurance (BTE)

Before the event insurance (BTE) is a type of policy that you purchase prior to an accident or incident. Like home insurance legal cover, BTE can be bought as an add-on to home insurance and will provide legal advice and cover costs and expenses of legal proceedings.

After the event insurance (ATE)

After the event insurance insures legal actions relating to events that have already happened, but where proceedings have not yet started. 

After the event insurance is run by solicitors and as you’d expect, is more expensive than home insurance legal cover.

Using your own solicitor

Many insurers will appoint their own choice of solicitors to your case up to the time that legal proceedings commence.

However, once legal proceedings commence, it is possible to request (in writing) your own firm of solicitors, provided you can offer a suitable argument as to why this firm is better suited to your needs. For example, they might be closer to you for meetings, may have acted for you before and have good knowledge of the case or have expertise in the area of law required. And of course, the fees payable must be comparable to the insurer’s solicitors.

If you do choose to use your own solicitor, ask your insurer to agree to the terms in writing beforehand. According to the Financial Ombudsman, one of the most commonly received complaints is from policyholders who used their own solicitors but the insurer refused to cover the claim.

Home insurance legal cover and liability cover are two different things.

If you are liable for the damage to your home, you would claim on your home insurance policy (you would not need the legal cover add on for this). Legal cover is used for reclaiming losses that weren’t covered by your main home insurance policy.

If you should need to claim on your home insurance legal cover policy, report the claim as soon as possible, either on the phone or in writing. Most providers list a dedicated legal expenses helpline in your insurance policy, as it can be a different insurer dealing with the legal claims.

You can request for a claim form to be emailed to you to complete, in which you can detail your case in full for the insurer to assess.

With employment cases in particular, the time limits during which you can claim can be very tight so the sooner you tell your insurer, the better.

28 October 2020