There are no standard policy wordings for legal expenses insurance. Variations in cover may not be easy to spot. Key issues are highlighted here by Ray Kneeshaw in this quick quiz

1. Policy wordings: according to the Insurance Companies (Legal Expenses Insurance) Regulations 1990, when must a policy wording be issued?(a) On request(b) With each policy quotation(c) With each individual policyd) With every policy, whether individual or issued under a scheme.2. Territorial limits: irrespective of cover offered by the host policy, legal protection has its own set of rules. A common difference is exclusion of foreign cover. EU cover would exclude which of the following?a) Andorrab) Switzerlandc) Canary Islandsd) Finland.3. Passenger cover: motor legal protection may only apply to the driver. This means a passenger would be unable to sue the driver for compensation under the cover, should their driving cause injury. What does a motor legal protection policy cover?a) Any named driver of insured vehicleb) Driver and all passengers in any vehiclec) Driver and all passengers in the vehicle insured by the host policyd) All vehicles driven by the principal driver.4. RTA claims: some policies define a valid claim as one arising following a road traffic accident. Which of the following would therefore be excluded?a) Collision with a horse on the public highwayb) Collision with an uninsured driverc) Accident involving personal injuryd) Collision in a private car park.5. Alternative transport: motor legal protection includes uninsured loss recovery (ULR). These are losses sustained by an innocent party that are not covered by his car insurance. Typically, this may include the vehicle excess, compensation for injury, plus replacement vehicle. What automatic entitlement is there to a replacement vehicle?a) Noneb) For seven daysc) While repairs are carried outd) Until claim is concluded.6. Policyholders: personal legal protection is provided through family cover attached to household insurances. Cover extends to the whole family, but how is this defined?a) Immediate family unit of parents and childrenb) Adult couple onlyc) All immediate family members living at same addressd) All immediate family members wherever resident.7. Free choice of solicitor: under the regulations, the legal expenses provider can choose the solicitor. When can the policyholder choose who acts for him?a) Neverb) At any point after thas made a claim and it has been assessedc) Once proceedings have been issuedd) When the insurance ombudsman intervenes.8. Limit of indemnity: it is usual to have either £25,000 or £50,000 of cover against fees and expenses in pursuit of a legal claim. The legal protection insurer or solicitor could extend this where there are excellent prospects of success. It is feasible to effect an after-the-event policy to cover the extra costs. What does the standard indemnity provide?a) Single use to the limit, then policy becomes voidb) Multiple use for same incident, then policy becomes voidc) Unlimited number of claims in one period of cover, each to the limitd) Unlimited number of claims in one period of cover, to the total limit.Other important facts about legal protection:

  • Cover is generally added on to relevant insurances such as home, motor or commercial
  • Cover cannot normally be added except at inception or renewal
  • Personal stand-alone before-the-event policies are not as readily available as they once were
  • Prospects of success: for a claim to be accepted, it has to be assessed as being "more likely than not" to succeed. The other party does not have to be 100% at fault
  • Reporting times: claims must normally be reported within 180 days. Different policies may exclude claims that arise after cover is effected, but occurring before or those that take place during a waiting period
  • Calls to legal helplines do not necessarily initiate a claim. The policyholder may need to call a separate claims helpline to do this
  • The legal policy must be independent of the host policy to avoid conflicts of interest
  • Unless specifically excepted, (often in travel policies) the legal policy may be used against the host policy insurers.
  • Answers and points arising1. d) A full policy wording must accompany each host policy according to the regulations, but the FSA has also given potential buyers of insurance the right to request a copy of the full policy wording.2. Any of these might be excluded under some policies, but custom, practice and the ombudsman would expect areas such as the Canaries to be covered by the same legal systems as their parent countries. Policy wordings can be challenged if unfair or misleading.3. a) or c) might apply, dependent on individual policy wording.4. a) You should be able to sue the owner of a horse that allowed its animal to stray on to the highway, whether accompanied or not. However, some policies might not cover scenarios b) and d).5. (a) You must always mitigate your losses. If you need a replacement car, one may be provided, though not necessarily to the same standard as your own. Loss-of-use compensation for taxis or alternative transport may be offered. However, time limits may be imposed and in some countries such as France it is not yet common to be offered car hire, even if a UK policy is being used.6. Individual policies will specify who is covered. They will all normally need to be resident at the insured address.7. c) and d) The legal protection company can use its own legal teams, or solicitors of its choice, up to the point where proceedings are issued. However, the ombudsman can over-rule and his decision is binding on the legal protection company.8. c).u This page is edited by RW Associates, a specialist in training, compliance and competence. Email: ruy.lopez@brokercompliance.co.uk