You can have your day in court - all legal costs paid
Look out for the add-on in your insurance that might let you take compensation claims all the way
Sunday 16 July 2006
If you fall foul of a bad boss, an uninsured driver or unscrupulous landlord, "I'll see you in court" could turn out to be the emptiest threat you ever make.
Solicitors don't come cheap - £150 an hour in some cases - and many people prefer to steer clear of "no win, no fee" lawyers because of the charges they'll incur if they do win.
Legal costs can be prohibitive and they prevent consumers from pursuing genuine claims.
But next time you're in a scrape, check your insurance policy: you could find you're covered for these costs.
Increasingly sold as a cheap add-on to home, motor and travel policies, legal expenses cover could save you thousands of pounds if you become involved in disputes.
It generally costs £15 to £20 a year and provides £50,000 worth of protection - in other words, legal fees up to this sum. Some companies include it as part of the regular premium. For example, the AA offers £50,000 worth of legal cover on its comprehen-sive motor policies, and £25,000 on home and travel insurance.
In a nutshell, these policies reimburse your legal costs if you decide to pursue claims for compensation against individuals or companies. You could use it to seek redress from an uninsured driver for lost earnings, for example, if you were the innocent party in an accident that meant you couldn't drive for months and lost out on business.
You could also claim for taxi fares or other reasonable travel expenses while your vehicle was off the road being repaired, or for the cost of car rental.
To do so, the solicitor hired by your insurer liaises with the other party or their insurer to try to get the money. You would have to prove that the accident meant you could not work, and provide receipts and evidence of your earnings. Policyholders can also try to claim back any excess (typically £100 to £500) on their insurance.
The self-employed may find the cover useful if having their vehicle off the road means they lose out on income.
Budget Van Insurance offers legal protection for £2 a month; this covers customers to claim through the courts for loss of earnings if they are unable to work as a result of a road accident or simply need to get a replacement vehicle. So long as the third party involved in the accident can be traced, customers are given access to a team of legal specialists.
Legal expenses on a home insurance policy cover a broad set of circumstances. These include contract disputes with tradesmen who botch a job in your home; property or boundary disputes; and jury service if you're going to lose out on income while you're in court.
Note that employers treat jury service in different ways: some will continue to pay employees their full salary while others, often smaller companies, will pay only a certain amount.
Legal expenses cover can pay some, not all, of your wages if they cannot be reclaimed from your company or the court. The self-employed are reimbursed in full by the court as long as they can provide proof of average earnings and expenses incurred.
Although you may have the cover, you won't always be given access to legal representation. Whenever you make a claim under a policy of this type, most insurers will assess the dispute in-house and then determine if there is an arguable case.
So, for example, if you were sacked from work and had a case for unfair dismissal, you could claim on your policy and your insurer's solicitors would fight your corner at an employment tribunal - as long as they thought you had a good chance of winning.
Tereza Fritz of consumer body Which? says the insurance is very useful. She cites her own experience when a surveyor failed to spot dry rot in a house she was buying. Using her legal expenses cover, which had cost her £20 a year, she sued the surveyor for professional negligence, won £25,000 in compensation and had all her legal costs (another £25,000) paid.
"When people call Which? and ask if they should engage a solicitor for certain things, the first thing they're asked is whether they have legal expenses cover," she says. "A lot of people don't realise they have it."
If you use your insurance policy to win compensation through the courts, you get to keep all the money. In contrast to no-win, no-fee deals, your premium has already covered all the solicitors' fees and costs.
Some travel policies also include legal expenses cover. Prudential's travel insurance will pay up to £50,000 if a policyholder takes action to claim damages or compensation for an injury sustained during their trip.
However, watch out for exclusions. These include action against family members or travelling companions, and against tour operators or travel agents.
So you couldn't claim if you were injured in a car crash caused by your partner. You also need to report all claims within 180 days of the incident.
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