WHAT IS LEGAL EXPENSE INSURANCE?

Legal Expense Insurance (LEI), is a type of insurance which covers policyholders against the potential costs of legal action brought against the policyholder by another individual or institution.

There are two main forms:

•          before-the-event
•          after-the-event
  
  

“the event” being some eventuality which triggers legal action

Legal expenses insurance provides more affordable coverage for the legal fees charged (including expenses incurred) by a lawyer or law firm representing the policyholder in usually unforeseen legal matters. These can include employment disputes, litigation, disciplinary actions, human rights complaints and criminal charges. Coverage is generally not discretionary; if the claim is covered within the governing terms and conditions of the policy, the policy responds.

Most Legal Insurance policies would be considered “before the event”.

Some specialized forms of LEI include various sorts of professional liability insurance, such as malpractice insurance for medical practitioners, errors and omissions insurance for consultants, agents and brokers of various sorts, and directors and officers liability insurance for principals and supervisory officers of corporations and other organizations.

Before-the-event (BTE) insurance, is taken out by those wishing to protect themselves against potential litigation costs that could be incurred following a usually hypothetical future event. These costs often include fees of lawyers and expert witnesses, court fines and fees, and any legal costs awarded to the other side. Before-the-event insurance is generally paid on an annual basis to an insurance company.