You're buying legal services through your insurance, do you know what you're getting?

I’m Liability insurance and legal services…

Here’s the thing:

Most small to medium businesses and certainly larger businesses purchase insurance to cover legal risk.

Think:

• D&O / EPL and ML;

• Professional indemnity insurance;

• Public liability insurance

to name just a few key covers.

When a dispute arises insureds are often surprised to learn about the claim process, often SME clients and those facing their first claim often ask:

• What do you mean there is no capital ‘C’ claim?

• Why won’t the insurer approve my preferred lawyers?

• What do you mean act as a prudent uninsured?

Here’s the thing:

If a claim is triggered and you are covered the insurer will almost certainly pay one or both of the following two things:

(1) legal costs; and

(2) damages.

Whilst the insurer ‘may’ end up paying for damages / a settlement amount BUT they ‘will’ almost certainly be paying legal costs if the claim is covered.

So! Basically (effectively / indirectly) YOU are buying legal services - Get IT?!

My point is this:

YOU should take an interest in how those legal services will be covered.

NOW! not when you’re sued.

Why?

Here’s my perspective:

• I was an insurance broker - yep I worked for all the big boys, Aon, Marsh, big super funds, at Lloyds of London not just negotiating claims (which I did for insurers before broking) but as a placement broker too!

• I was an insurance purchaser too (in-house general counsel for insurance business and bank); and

Now working as a private practice insurance litigation lawyer means I have a unique perspective

I recommend asking these questions of your insurer via your broker:

1. What lawyer, person and firm will the insurer prefer to appoint if I have a claim?

2. Are there various panel firms I can choose from and can I engage with them now to understand their approach?

3. What do I need to do to have our preferred and current lawyers approved to act under the policy?

4. What is required for a ‘Claim’ under my policy?

5. What if a dispute arises but there is no demand for compensation or proceedings commenced, will I have any cover? Are there any legal expenses cover pre claim? (ie mitigation costs legal expenses or can these be included). Even if there are no mitigation costs cover will my own legal spend on mitigating a claim erode the excess if a claim later occurs?

Now your broker is the best starting point but the best timing to ask these question is NOW or maybe at renewal NOT when a claim happens.

By the way, feel free to copy and paste these questions to your broker or insurer and:

• There is nothing wrong with using the Insurance panel firms.

• Often you get great specialist litigators at discounted rates and the fees covered directly by the insurer without uncertainty.

• But here is my point - don’t learn who’s going to act for you when a claim happens find out in advance! Take an interest in your legal risk management.

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tagged as:

• insurance law
• litigation
• corporate law