LPG is the only player left in this area of the market, following the withdrawal of the four other main specialist insurers over the past few years. LPG has also made a series of fundamental changes in its family legal benefits insurance policy.
Policyholders will have to pay 10 per cent of the total costs of any legal expenses that are incurred on the policy. The number of people included in a policy is also being restricted. Married couples, their parents and children under 21 will be included in the same policy if they live at the same address.
However, couples who are living together but not married will now be considered 'on an individual basis', according to an LPG spokesman.
The policy will no longer cover matrimonial and defamation disputes. The costs of defending any criminal prosecutions are also excluded from the revamped policy - although a reimbursement of legal costs will be made if the defendant is ultimately found innocent or charges are dropped.
Policyholders who make a claim to support an employment law dispute from now on will have to be represented by one of LPG's in-house employment specialists. In the past they could have been represented in an Employment Tribunal by their own solicitors.
A one-year policy giving cover to pounds 25,000 now costs pounds 195 - up from pounds 150. A pounds 50,000 policy now costs pounds 234 - up from pounds 180.
James Painter, LPG's product development manager, described the premium increases as 'regrettable', but said: 'We're getting a lot of claims in. When you look at the cost of legal disputes, the costs of our premiums are pretty low.'
LPG's last rival in this part of the legal expenses insurance market, CareAssist, pulled out in December. Like the other specialist insurers, it had found that the consistently high level of claims made the product ultimately unsustainable.
The vast majority of people who have personal cover on legal expenses obtain it through group schemes through their trade union, employer or trade association. By offering the cover this way, the insurers believe they can overcome the 'selection problem' in which only those people who know they are going to be involved in a legal dispute take out the cover.Reuse content