Types of Legal Expenses Insurance
24 Jan 2010 • 07:09 AM • BusinessIn this day in age, it seems as though people are far too eager to jump to legal action at the slightest provocation. Lawsuits seem to be by far the most popular type of action taken by those in the general population, and can spring from any number of events, from a car accident to a cup of spilled coffee. Fortunately there is a way to protect yourself from at least the financial hassles of lawsuits, in the event that one is brought against you – that way is through legal expenses insurance; also known as LEI, there are two different types.
The first and most often held LEI is known as “before the event” insurance, or BTE insurance. As you would expect, this type of legal expenses insurance is taken out by those wishing to protect themselves from future litigation expenses. Similar in nature to other types of insurance policies, BTE insurance is used in the event that a lawsuit is brought against you for some reason, and is commonly found as part of household or auto insurance policies. Fees covered would include court fees, expert witness fees, and damages awarded to the other side, among other things.
The second type of LEI is “after the event” insurance, and as the name implies, it is purchased following a lawsuit being brought against you. Known as ATE insurance, it is also used to cover legal expenses such as the ones listed above, and can be purchased both by the defense and the prosecution. This premium on this type of legal expenses insurance is generally deferred until the conclusion of the trial, at which point must be paid if the trial was successful for the purchaser. Many solicitors who work on a no-win-no-fee basis require clients to purchase ATE insurance, in order to assure costs will be covered if the case is lost.
While we all like to think that it will never happen to us, the truth of the matter is that here in the UK, personal injury claims are on the rise. While certainly not at the level of those in the US yet, it’s still best to be prepared, and to protect yourself with legal expenses insurance.
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