Legal Insurance

Scorpion Protects your Legal Rights in and out of court, twenty four hours a day, anywhere in South Africa.

The sad reality is that you and your family can be deprived of your rights, if you do not have legal cover.

Scorpion will fight for your rights face-to-face or by telephoning or writing to your opponents, paying your attorney fees, offering you legal assistance and advice, as well as negotiating on your behalf. Strike back legally against anyone who violates your rights!

More info on Scorpion legal insurance here.

Legal expenses insurance (LEI), also known as legal protection insurance (LPI) or simply legal insurance, is a type of insurance which covers policyholders against the potential costs of legal action brought by or against the policyholder. The concept originated around 1911 as a result of a fatal crash at the famous Le Mans race during which some spectators lost their lives and others were severely injured. When the victims or their families claimed damages from the insurers of the organizers, their claims were repudiated. They then all contributed to a pool which was used to fund collective action against the insurers. They were successful. This gave rise to the first LEI policy being developed in France. Not long after that, a motoring club in Germany called the “Deutsche Automobil Schutz” (DAS) increased membership contributions to create a similar pool to pay for the defence of its members charged with traffic related offences. Members of the general public then enquired about joining the scheme. That is when the idea of an insurance available to the general public became firmly established. At present, the DAS of Germany is still the largest legal expenses insurer in the world. It is estimated that they write approximately 50% of LEI business worldwide. Then follows ARAG, also a German insurer. It is estimated that they write approximately 30% of global business.

Legal expenses insurance provides more affordable coverage for the legal fees charged (including expenses incurred) by a lawyer 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. In addition to liability insurance against certain kinds of legal liability, legal expenses insurance can also offer coverage for predictable events such as the drafting of a will or power of attorney, and simple legal advice.

What Personal Legal Insurance Covers

Most people think first of needing an attorney if they are sued or convicted of a crime, but your reason could be as ordinary as needing a will or a trust or buying or selling property. You could also require an attorney if you get divorced, seek sole custody of your child or decide to file for bankruptcy (see How To Hire A Bankruptcy Lawyer.) If you have trouble with your landlord, personal legal insurance can help in that situation, too.

If you need to consult with an attorney in person, personal legal insurance will pay the full cost of the attorney’s hourly fees for your consultation and you won’t owe anything out of pocket. Unlike health insurance, there are no co-payments or deductibles. The insurance will also cover the cost of an attorney’s fees for preparing or reviewing documents such as advance healthcare directives and healthcare powers of attorney. The plan may also provide unlimited access to attorneys through a toll-free phone number you can call for help with a covered service.

Personal legal insurance may entitle you to reduced fees for services the plan doesn’t cover when you use an in-network attorney. For example, you might get a discount of 25% or more on noncovered services. Some personal legal insurance plans offer access to related services, such as tax advice from tax professionals.

And some plans will cover not just the employee, but also his or her spouse and dependents.

Personal legal insurance companies differ somewhat in the coverage they offer. Further, if you get your personal legal insurance through your employer (many large companies offer it to their employees as an optional benefit), be aware that your employer can customize the coverage available to its employees. For these reasons, plan specifics will depend on what the insurance company offers and what your employer makes available. You can also purchase an individual plan on your own.

What’s Not Covered

As with health insurance, you’ll have a limited number of providers to choose from under a personal legal insurance plan. You may have the option to use an attorney outside the network, but instead of the plan paying the attorney directly, you may have to pay up front, then file a claim with the insurance company to get reimbursed. The plan may pay your out-of-network attorney the amount it would normally pay an in-network attorney, and you’ll be responsible for any difference. You’ll need to make sure you understand the plan’s limits on out-of-network attorney fees so you don’t incur bills you can’t afford to pay.

While some plans advertise that participants get a discount on noncovered services, some attorneys will make up for the “discount” you’re supposed to be getting by charging a higher hourly fee to start with or marking up other services they bill you for. And even for covered services and in-network attorneys, you may still pay out of pocket for certain costs associated with the legal services you need, including document filing fees, court reporters’ fees and expert witness fees.

Certain services are excluded completely, and you won’t receive any coverage for them at all. A plan offered through your employer will not help you sue your employer or defend yourself if your employer sues you. If you have a problem with workers’ compensation or unemployment compensation, you might not be able to turn to the plan’s legal services for help. It won’t help you go to small claims court or file a class action lawsuit. And if you find yourself involved in a lawsuit that is covered by another insurance policy, like your homeowners or auto insurance, your personal legal insurance won’t apply. (See How Umbrella Insurance Works.)

Personal legal insurance also won’t cover advice on business matters. If you need an attorney to help you get a small business off the ground or to help you deal with a difficult tenant of a rental property you own, you’ll have to hire one on your own. You also can’t use personal legal insurance to file a frivolous lawsuit. Not surprisingly, you can’t use your personal legal insurance after you retire from the company that offers the plan or after you are fired. However, if you started working with an attorney through the plan before you retired or lost your job, your policy may cover the rest of that case. Other exclusions include matters involving foreign (non-U.S.) law and those involving other members of the plan group. In other words, you might not be able to use the plan to sue your coworker.

Other Limitations

Further, personal legal insurance plans divide different types of legal services into different categories, and there may be limits on how much service the plan will cover in each category. For example, to use “preventive” legal services such as having an attorney review your will, the plan might cover one hour of service per calendar quarter.

Under some plans, you can only use each type of coverage once per year per policy. That means the plan might cover the cost of having an attorney prepare your will, but not your husband’s. Or, if you were charged with two misdemeanors in one year, your plan would only cover the attorney’s fee for your first misdemeanor.

Some plans also have waiting periods, meaning you’ll have to be enrolled in the plan for several months before you can use certain services. This waiting period is meant to protect against moral hazard, where people try to avoid signing up for insurance until they actually need to use it. However, some policies do not have any waiting period and even allow you to use the policy for a pre-existing legal problem, as long as you aren’t already working with another attorney. Other policies say that pre-existing circumstances may or may not be excluded depending on whether the participating law firm you choose wants to take on your case.

The comprehensiveness of a personal legal plan can vary significantly from one provider to the next. Make sure you read the fine print and understand what’s covered, what isn’t and where you could incur extra costs before you sign up. For example, the plan might cover the cost of an attorney’s hours spent in trial, but not the hours spent preparing for your trial. Those hours would represent a significant expense that you’d have to pay out of pocket.

How Good Are the Lawyers?

In addition to paying careful attention to what’s covered and what isn’t, look at the plan’s requirements for its in-network attorneys. You want access to experienced attorneys who graduated from accredited law schools and are currently licensed by the states where they practice. Before signing up, get a list of the plan’s participating attorneys, then search online for reviews of the participating law firms and attorneys in your area. There’s no sense in signing up for a plan that gives you access to professionals with poor reputations. Also check with your state bar association website to make sure the plan’s attorneys are in good standing.

A good plan will include attorneys with a variety of specialties, just as your health insurance includes providers with different specialties. This way, you’ll have access to experts in various scenarios. A good plan will also have a broad network. Some plans have small attorney networks, with perhaps as few as one participating law firm per state. This might mean that you can only contact your attorney by phone or email because you don’t live anywhere near the office or that it’s difficult to get an appointment because every plan participant in your state is trying to work with the same law firm.

If English is not your preferred language, see whether the network includes attorneys who speak your language. Also look for a plan that will let you work with the same attorney repeatedly, so you can build a long-term relationship with one lawyer.

Ways to Buy Personal Legal Insurance

If your employer offers personal legal insurance, you’ll have the opportunity to sign up when you’re hired, then again each year during open enrollment. After you’re signed up, you can cancel at any time, but you can only change your coverage during open enrollment. You’ll automatically remain enrolled each year unless you cancel.

If your employer doesn’t offer personal legal insurance as a benefit, you can purchase an individual policy on your own. The plan coverage may not be as comprehensive as that offered through an employer.

Read more: How Personal Legal Insurance Works | Investopedia