Commercial Legal Expenses Insurance provides cover for a business in the event of being sued by employees, customers, suppliers or others, or needing to pursue an action in respect of its own legal rights.
Benefits of Legal Expenses
Cover under liability policies is only for defence costs; they don’t provide an cover for legal costs incurred in pursuing the policyholder’s rights, unlike Commercial Legal Expenses Insurance.
Companies must keep also up-to-date with legislative changes to avoid breaching compliance in areas including employment law, health and safety and liability cover.
Outline of Cover
Cover provides the policyholder with an indemnity against legal and professional expenses in pursuing a claim, for certain awards of compensation and for costs and expenses only incurred with the prior consent of the insurer.
Solicitors can be amongst the most expensive professionals in terms of hourly rates, charging around £200 to £400 per hour, on top of barristers’ fees, court costs and other administrative expenses.
Statistics suggest that a business is ten times more likely to have a claim relating to an employment dispute than to suffer from fire damage to their premises. In most instances, costs nearly always have to be paid by each side, regardless of who wins.
Companies are increasingly demanded to keep up with government legislation, as well as EU directives. It has been suggested that only 1 in 10 companies actively try to keep up with changes in European Union laws.
HM Revenue and Customs tax investigations place heavy burdens on businesses across the UK. There has been particular focus in recent years over the status of small to medium enterprises and their contractors.
When an employee or claimant is successful, the tribunal will award compensation. There are two parts to the award, a basic award and a compensatory award. The amount will be based on the claimant’s individual circumstances.
In addition to the legal expenses involved, Commercial Legal Expenses Insurance will pay the compensation awarded against the employer, provided the policyholder has followed the advice of the insurer’s legal helpline and/or the ACAS Statutory Code of Practice on Discipline and Grievance.
In addition to legal expenses, some policies may provide cover for witness attendance expenses, specific compensation awards and professional fees/expenses incurred in carrying out an investigation. Cover can be extended to include jury service attendance for key employees.
A standard policy tends to restrict cover to legal actions arising or pursued in the United Kingdom. However, for some contracts and for cover relating to infringement of copyright and patents, a worldwide limit may be required.
Most insurers provide access to advice on commercial legal and taxation matters, such as qualified lawyers and solicitors, tax experts, accountants, health and safety professionals or councillors.
The intention of the advisory service is to provide information and guidance. It is in the interest of the insured that information is sought at an early stage in a dispute, or better still before any dispute arises. Legal costs can be minimised if the dispute is handled correctly.
Policies can include access to 24-hour legal advice from experienced solicitors and in-house consumer and employment dispute experts. Cover can include costs occurred in pursuing or defending:
- Property disputes
- Contractual disputes
- Bodily injury
- HMRC tax investigations
- Statutory licence disputes
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