The Legal Services Board wishes to see legal expenses insurance promoted more widely to consumers, as part of a programme to widen access to legal advice in England and Wales.
An estimated 3.6 million people have an unmet legal need involving a dispute each year, and few consumers can meet unexpected legal costs from disposable income. While millions of households have legal expenses policies, these are relatively rarely used. In LSB’s legal needs survey only 7% of people who did not pay for legal services to deal with a contentious issue used insurance.
Research by the Financial Conduct Authority suggests around 15 million adults may have legal expenses insurance. However, since it can be a standard feature of home insurance many people may not realise they have it. In the LSB’s research, participants had little understanding of these products and how they could use them. Participants also found the process of selling legal expenses insurance as an add-on to existing cover disengaging.
The LSB’s new research shows most people who took part assumed legal expenses insurance is more expensive and restrictive than it actually is. This misconception limits the role legal expenses insurance could play in meeting unexpected legal costs. A third of those involved believed the cost of home legal expenses insurance to be at least double the typical cost of around £20-30 per year – comparable to the cost of travel insurance.
Another misconception was that the protection is limited to the product it is sold alongside. In fact, while a product purchased with home insurance might cover housing issues, it will normally also cover legal issues related to employment, injury, contracts and other more.
Steve Brooker, Head, Policy Development and Research at the Legal Services Board, said:
“While legal expenses insurance is not a fix-all, it has the potential to protect more people from unexpected legal costs and is cheaper and covers more issues than many consumers think.”
“People often need legal help when they are at their most vulnerable, for example when facing a housing or employment issue. Legal expenses insurance can provide consumers with the peace of mind that the cost of legal advice and representation will be covered.
“We see legal expenses insurance or similar products as one of the ways to enable more people to access legal services free at the point of need.”
“The insurance industry has a role to play in better promoting legal expenses insurance to consumers and building stronger confidence in these products.”
Addressing unmet legal need in society is a key component of the LSB’s Reshaping Legal Services sector-wide strategy. The LSB will continue to work with the insurance industry and others to increase understanding of legal expenses insurance among consumers.
Notes to editors
Research report is here: https://legalservicesboard.org.uk/research/legal-expenses-insurance-public-panel-research
About the research
The research included both a rapid evidence review and a qualitative online discussion over a week with 46 adults from a range of backgrounds. It was carried out in March 2021.
About legal expenses insurance
Legal expenses insurance (LEI) can be purchased to insure against potential future legal costs. Policyholders can access legal advice and representation with legal costs and expenses being covered by the policy. Sometimes it is included as a standard feature of primary insurance policies (usually motor or home insurance). Alternatively, it is purchased as an add-on to these existing insurance policies. Legal cover can also be included within employee benefits packages and packaged bank accounts.
Financial Condict Authority research: https://www.fca.org.uk/publications/research/financial-lives
LSB’s Individual Legal Needs Survey: https://legalservicesboard.org.uk/online-survey-of-individuals-handling-of-legal-issues-in-england-and-wales-2019