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Andrew leads our Operational Team and is our expert when it comes to all the ins and outs of car hire excess insurance.
Motoring legal assistance or legal expenses cover, it's one of those extras that insurers throw in with your comprehensive car insurance. Or at least, they used to throw it in. Nowadays, it's more often automatically added as an extra that you pay for and you have to untick the box to remove it.
It's costing extra but they've assumed you want it. Are they acting in your best interests because it's something worthwhile that you really need, or in theirs to increase profits?
To make a reasonable decision about whether you want it, the first step is to appreciate what it covers, and just as important what it doesn't. For the full answer, you have to look at the small print of the specific policy being offered. However, most policies have the following in common.
What does motoring legal assistance cover?
It pays the legal costs (yours and your opponent's if you lose) for recovering uninsured losses from a third party after an accident. Uninsured losses are normally defined as losses you cannot recover from any insurance policy. So this only really comes into play if you've been hit by another driver who isn't insured.
You'd be expected to claim on your own insurance policy and then use the legal assistance cover to take the uninsured driver to court to reclaim things like: your insurance excess and loss of no claims discount ; personal possessions in the car; loss of use of your vehicle (ie. hire car costs) and personal injuries to you and/or other occupants of the car.
The financial ombudsman has recorded a 27% increase in complaints resulting from legal expenses insurance from 635 in the year to 31st March 2011 to 805 cases in the year to 31st March 2012.
The ombudsman says that the complaints usually revolve around one or more of three issues:
What are reasonable prospects of success?
If your insurer doesn't believe your case has a reasonable prospect of success they will not fund the action. So, what constitutes a reasonable prospect?
In short, a 50-50 chance of winning the case is not enough. It must be 51% to be supported by the ombudsman. Who decides what the chances are? The solicitor appointed to your case.
A second element is the cost of legal action compared to the possible recovery. A claim for £100 is likely to be refused if it would cost £1000 to bring the court case.
You also need to consider the ability of the uninsured driver to pay the costs. If the uninsured driver has no assets, the prospects of actually recovering money look remote.
Can I choose my own solicitors?
Generally no, you'll be restricted to the "approved” solicitors defined by the insurance policy but this does vary.
Complaints here revolve around how well (or badly) your case is being handled by the solicitor and insurance company. Pulling out of a case because you believe it is being handled badly could leave you liable to legal costs.
What's the alternative?
If you don't purchase the insurance you would have to either accept your uninsured losses and get on with your life or find a solicitor and fight the case yourself. You would be liable for your solicitors costs, though there's no shortage of solicitors willing to offer no-win no-fee terms. You would have control over all aspects of the process. Whether you would find that liberating or daunting should give you some idea about whether you should take this option!
Taking this route would leave you liable for your opponents legal costs if your action failed.
The ombudsman approach is that it is unreasonable to expect an insurer to fund a legal action that a prudent uninsured person would probably not fund themselves.
As with paying for Protected No-Claims Discount, whether you take out the additional cover comes down to your circumstances and personal appetite for risk. The additional cost should be weighed against the chances of being able to use the legal assistance cover and whether you are comfortable to take that risk upon yourself instead.
For those comfortable with the additional risk, un-ticking the box could be a simple way to save £25-£30 on your renewal premium. Greater savings can be achieved by getting the best deal by comparing car insurance.