The miss-selling of Legal Expenses Insurance

What does twenty quid get you these days - a trip for two to the cinema or perhaps a couple of bottles of sun cream to get you through this hot weather we've been enjoying recently?

Or you could treat yourself to some Legal Expenses Insurance, £20 being roughly the standard price your home or car insurance company will charge for supplying it (LEI) for twelve months

The theory is, you pay a small amount each year for the cover, and it'll pay your legal costs should you be involved in a car accident, employment dispute or similar legal matter. But is it really necessary?

Being bound by an LEI contract can be frustrating: first of all, your insurer will sell your case to one of their panel solicitors, which may not be the type of lawyer you'd have chosen were it up to you. You are legally allowed to choose your own solicitor, but this right can only be exercised once proceedings have been issued, and I'm sure you'll appreciate the impracticalities of switching solicitors mid-stream.

It is also at your insurer's discretion as to whether they take on the case or not. They may feel they do not have a sufficient chance of success, and refuse to take on the case. Yet there are independent solicitors out there who have expertise in taking on the tricky, hard to win cases that your insurer won't touch. So why pay 'upfront' for LEI when there's no guarantee your case will be taken on?

For me personally here, there's a huge irony - as managing partner, when renewing our car insurance policies for the firm's fleet of cars, the insurer tried to make me take out LEI on each. When queried, I was told it 'came as standard'! So let's get this straight: they want me to pay them £20 per car so if one of our drivers were to have an accident they would sell our claim to their panel solicitors? No chance! I think I'll decide which solicitor to use, thank you very much.

Then there's the issue of time. . . many LEI policies stipulate in the small print that claims must be made within (typically) 180 days of your accident. Now, legally, you have 3 years make a claim. For numerous reasons, individuals do not always claim immediately - work, family, holidays etc can take priority. Often, the severity and recovery time may not become apparent until much later than 180 days, so you've wasted your money paying for the policy if it expires before it can be used.

And possibly the most infuriating thing surrounding LEI is the way in which it is often sold: many households are paying for LEI cover of which they are completely unaware. Often it comes 'as standard' on a home or car insurance policy, slipped in without being properly explained or even mentioned by a broker / sales rep.

As with so-called 'Third Party Capture', with LEI the odds are stacked in the insurer's favour: they choose 'if' the case will be taken on, they choose 'when' the case will be taken on, and they choose 'who' fights your case. And you pay them £20 for the privilege! Doesn't seem fair.

Most independent law firms will take on your case on a 'no win, no fee' basis, under a conditional fee agreement. In short, if you win the case you keep 100% of your compensation. Lose, and you do not pay a single penny.

So my advice is this: do your homework when paying for an insurance policy - have your insurers charged you for LEI cover which you didn't know about? Think - do you really need LEI when an independent solicitor will arrange and fund legal expenses upon taking your case on? There's no need to be bound by a restrictive, expensive and unhelpful insurance when you don't really need it!