Consumers often get confused by the phrase “legal insurance” with the rather justified source of confusion perhaps emanating from the lack of clarity around exactly what legal insurance is and how it works. Is it even necessary at all?
What is legal insurance?
Legal insurance is basically just insurance coverage which is offered by an insurer to help you pay for legal fees should there be a need for you to do so.
Who provides legal insurance coverage?
Legal insurance is provided by a registered financial services provider which is licensed to provide insurance as part of their financial services offering. Legal insurance is often not provided by a legal firm, something which is often the source for quite a bit of confusion with clients taking up issue with the legal firm they otherwise might have thought provides the service of offering insurance. It’s basically just the insurer collecting premiums from all their clients and then using that money to pay for the legal fees of any one or more of the clients that might require legal services. This is why having legal insurance works out cheaper than having to pay lawyers as and when a legal issue comes up and as far as the insurance company goes, they naturally make a profit through not having to pay for the legal fees of all of their clients since not all of the clients would necessarily have some legal issues to contend with.
Does the structure of how legal insurance is provided affect the legal costs?
The legal costs which the legal firm charges remain unaffected by the fact that they are paid by an insurance company, but for the clients who take out a legal insurance policy, they can enjoy paying less for full legal services as a result of the fact that they have legal insurance coverage.
What about the quality of the legal services?
Since the legal firm used by the insurer to provide legal services to the client gets full payment for the services they provide, this doesn’t affect the quality of those services at all. In fact, one could say that it affects them positively if at all, since that legal firm wants to establish itself as a regular service provider of the insurer, which in-turn has many clients to refer and pay for.
When do you NOT require legal insurance?
Whilst its advantages are clear for anyone with a basket of monthly bills to see (the average person would struggle to afford hefty legal fees which crop up unexpectedly), legal insurance is not always necessary, but often this would be the case in the event of specific legal requirements. If you live in Portland for example and you have access to the services of a legal firm such as Johnston Law Firm, there would be no need for your legal insurance to cover something like personal injury since this particular law firm provides free consultation as far as that goes. As mentioned though, this is often a very specific legal service which is accessible without the need to pay a hefty consultation fee.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.