Legal expenses insurance - the missing link

Mark Laudrum Director, BrokersOnline

Legal expenses cover provides not just for defence costs but also pursuit costs, for certain legal matters.

The typical insurance program for members would be professional indemnity and public liability, workers compensation, and then branching out to include management liability (directors and officers) as well as cyber and business property policies.

These have been the mainstay for many years with each policy developing over time to cater for new risks or practices such as the inclusion of cover for on-hired contractors, changes to workplace health and safety NSW prosecution costs, work from home arrangements, and the increasing provision of consulting services/statements of work projects.

A relatively new product available to Australian businesses has been the introduction of legal expenses cover.

This dedicated policy provides cover not just for defence costs but also pursuit costs, for certain legal matters. The inclusion of pursuit costs is a significant move away from the traditional defence costs only cover that is provided by the typical legal-based insurance policies mentioned above.

In many legal disputes, having access to ‘before the event’ cover for certain pursuit costs covered via an insurance policy can provide affordable access to legal advice and representation in courts and tribunals when businesses are faced with unforeseen legal action.

There are many areas where businesses can face legal scrutiny, including environmental laws, employment disputes, work health & safety (WH&S), statutory licence appeals, and criminal prosecution defence. With recent amendments to the Work Health and Safety Act 2011 (NSW) prohibiting insurance and indemnity arrangements relating to WH&S prosecutions, this potentially removes the comfort that was once afforded to directors and employees under standard management liability policies. Legal expenses insurance can add to your overall legal risk management program and is a sound inclusion to assist with any unforeseen gaps between your existing insurance policies.

Legal expenses insurance is not litigation or liability Insurance, it is for the defence and or pursuit of insured legal matters.

Due to the complexities of the legal justice system and exorbitant legal costs many businesses may be deterred from exercising their legal rights, however, with legal expenses insurance, you will have peace of mind and protection at the time it is needed.

Legal expenses insurance is not a replacement for your current insurance policies but is an important addition to your insurance program.

In addition to the policy cover, members have access to a vast array of legal document templates in the areas of employment, business operations, company operational agreements and obligations, as well and numerous personal templates relating to wills and powers of attorney, etc.