Legal protection insurance helps the insured in the settlement of their disputes. What are the areas covered, the services offered, the nature and amount of the costs supported?
Legal protection insurance shall pay for the costs of proceedings or provides services, in the event of disagreement or dispute between the insured to a third party, including:
- defending or representing the insured before or during proceedings;
- defending the Insured against a claim against him;
- amicable settlement or in the courts, if necessary, of the damage suffered.
Most of legal protection coverage covers any family members (spouse, children and, in most cases, any person regularly living with the family).
Legal protection may be offered in a support policy (comprehensive insurance for example) or in a stand-alone policy. It may also be issued with other benefits (credit cards, association membership cards).
Generally, legal protection cover comes in three forms.
Under the liability cover, the insurer shall pay to repair the damage caused to a third party by the Insured. Whereas legal cover does not indemnify any third party.
Criminal defence cover and appeal after an accident
This cover widely used in Comprehensive Home and Motor Insurance concerns exclusively disputes related to events covered under the policy (accident, water damage, fire…).
Under this cover, either of the following will be paid:
- criminal defence of the Insured accused;
- or the appeal to get compensation for the personal loss suffered if the Insured suffered the loss (litigation related to a traffic accident, for example).
Legal insurance covering an area of intervention
This type of insurance covers events, disputes or litigation relating to a specific area and referred thereto. There are many areas of intervention: health, personal accident, home, automobile, consumer…
For example, for a cover on disputes related to the purchase, rental or the delivery of goods or the poor performance of a service, a legal “consumer” protection should be purchased.
The general legal Cover
It is the most extensive cover provided by the insurer that
Legal Information and Assistance
Insurers offer a legal information telephone service. A team of lawyers is made available for the Insured to get information on their rights and guide them before any procedure.
Defending the interests of the Insured
As part of the coverage provided under this policy, the Insurer shall develop as soon as possible, amicable or judicial means to get to the most satisfactory solution to the dispute.
Most disputes relate to everyday life issues and are most often settled in an amicable with the support of:
- a team of lawyers who inform the Insured, conducting the negotiations together with his opponent.
- experts specialising in the relevant area of the dispute (real estate, automotive, medical…) to support the case.
When the case requires legal action, lawyers’ fees, proceeding costs and additional costs can be very substantial. They are supported by the insurer, as part of the legal protection cover, within the limits of the policy
Expenses and fees necessary to settle the litigation are paid by the Insurer
- expert and bailiff costs and fees;
- lawyers in a court action;
- the costs of the proceedings
The nature and amount of those fees and costs are set out in the policy.
Any amount in reimbursement of expenses and fees incurred to settle the dispute, primarily benefits the Insured up to the expenses he incurred.
Costs incurred by the Insured prior to the claim shall be paid within the contractual limits, when the insured can justify they were incurred as part of emergency measures.
However, any fines, interest on arrears or damages the Insured could be ordered to personally pay, shall never be supported.
Policies may include:
- thresholds (the insurer shall not be involved if the amount of the claim is less than a certain amount);
- liability limits (the amount of expenses is often limited per case or per year);
- a cap on lawyers’ fees based on the categories of company actions. See schedule to the Policy;
- territorial limits (France, UE…);
- waiting periods (period during which the insured is not covered).
The legal protection cover is governed by articles L. 127-1 and seq. of the Code of insurance which includes specific provisions to its functioning.
A separate cover
Legal protection cover is subject to a separate policy if included in another policy, a separate paragraph mentioning its content and the corresponding premium.
Involving a lawyer
The Insured must be assisted or represented by a lawyer provided that he, or his insurer is aware of the fact that the defence of the opposing party is conducted under the same conditions.
The Insured may choose his own lawyer
The principle of free choice of lawyer is recalled in any legal protection insurance policy.
The insurer may only suggest a name of a lawyer upon request of the insured in writing.
In any case, it is the responsibility of the Insured to lead the proceedings. However, during the procedure, the insurer shall remain at his disposal and that of his lawyer to assist them if required.
Arbitration in case of disagreement between the Insured and the Insurer
Unless any characterised emergency situation, measures to be taken to settle a dispute shall be made jointly with the insurer.
In some cases there may be a disagreement between the insured and the legal protection Insurer on the actions to be taken. For example, the insurer may refuse to engage in litigation if they believe the action will fail. In this case, the Insured shall call upon an arbitrator appointed by mutual agreement with the insurer or, otherwise by the District Court.
Insurers agree to rely on the opinion of a third party, chosen by the insured, insofar as this third party is duly authorised to give legal advice.
The costs incurred to initiate proceedings are the responsibility of the Insurer unless mis-initiated by the insured.
The Insured retains the possibility to initiate an action at his own expense although the arbitrator gives a contrary opinion. If he gets a more favourable solution than the one used by the arbitrator or his insurer, the latter will refund the costs of procedure, within the limits set under the policy.
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