What is Legal Protection Insurance?
In any legal claim, there is always a chance that you will not be successful. Losing a claim at trial has the potential to be very expensive, and for potential plaintiffs, the risk of adverse costs can be enough to prevent them from advancing a claim in the first place. With legal protection insurance, however, plaintiffs can insulate themselves by purchasing coverage for some of the potential costs associated with purusing litigation.
What is legal protection insurance?
A relatively new type of insurance product, legal protection insurance (also called legal expenses or litigation insurance) offers protection from various forms of legal costs. Generally, these products offer coverage for legal costs and disbursements incurred during the litigation process. There are two types of legal protection insurance available.
“Before the event” insurance: As the name implies, this type of insurance is purchased by consumers before they are aware of a potential claim. It is often an optional rider that can be added to other policies such as homeowners or business insurance. In the event that they find themselves in a position where a claim is necessary, this coverage would provide legal advice and representation.
The types of claims covered are limited by the terms of the policy, and in some instances the insurer holds a significant amount of control over the course of litigation.
“After the event” insurance: This type of product is purchased on behalf of litigants. It covers adverse costs that a plaintiff may be ordered to pay if they are unsuccessful at a procedural motion or at trial, as well as the cost of disbursements like court fees, medical expert reports, and other expenses that are necessary to bring a claim to trial. It does not provide coverage for the plaintiff’s own lawyer’s fees.
Most policies require that claimants accept “reasonable” offers to settle from the other side, but they do not step in to direct the strategy or decisions made in the course of litigation.
Why is legal protection insurance good for plaintiffs?
Before this type of coverage was available, plaintiffs would often be faced with a difficult decision. Even if they have a good claim, the potential costs of going to trial are often extremely high. Weighing the risk of paying these costs out of pocket, many plaintiffs instead choose to take a settlement than may otherwise be entitled to. Defendant insurers and corporations were able to take advantage of this, and push plaintiffs to accept lower settlement amounts by holding the risk of adverse costs above their head.
Toronto personal injury lawyers for seriously injured victims
Legal protection insurance allows plaintiffs to pursue viable claims to their necessary conclusion, without having the risk of adverse costs impacting their decision to accept a settlement or proceed to trial. At Derfel Injury Law, we represent seriously injured victims, and can advise claimants about the way this coverage can help them pursue their legal claim.