As a personal injury lawyer of over 25 years’ experience, and having worked for claimants and insurers, our resident expert Mark Lampkin questions whether legal expenses insurance is good for you.
When you renew your car or home insurance you may notice an added on cost of providing legal expenses insurance whether you requested it or not. But what does it actually mean? Well legal expenses insurance is a way of your insurance company earning some commission from another insurance company for selling you this product. In my view, given that most people don’t even know they have it never mind that they actually bought it, this may be the next PPI debacle.
Be that as it may, if you then go on to have an accident or need to claim from another party you may think that your legal expenses insurance is your blank cheque with which you can instruct the lawyer of your choice safe in the knowledge that someone else will pick up the tab. Sure most policies will say that you are covered for up to £50,000 of costs but the small print will also say that you must instruct a solicitor appointed by them.
The reason they give is that those solicitors have been selected on the grounds of their specialism but the real reason is often that those solicitors will give the insurers the best deal. In the past this would have literally meant the solicitor that would pay the biggest referral fee. These fees were banned in April 2013 so now the financial arrangements between solicitors and legal expenses insurers is either hidden or the insurers have now become the solicitors by starting a new legal company.
So it is now even more likely that the insurers will insist on you using their solicitors because they are one and the same. This is despite the Court of Appeal telling these insurers in the case of Brown-Quinn v Equity that they must accept the client’s choice of insurer. The court was clear that you should be able to instruct your own lawyer provided they adhered to the terms of the policy, for example accepted the rates of pay.
Consistently and persistently these insurers flout this court ruling and protect their interests by forcing clients to use only their solicitors. What, you might say, is wrong with that if you end up with a solicitor anyway? Well the solicitors that operate this way receive thousands of cases each month and you will merely be another number. The profit margins of this type of business model are such that you can only receive a “pile it high and sell it cheap” service. If you want to be dealt with as a commodity then carry on but my view is that if your case involves a serious injury and you want to be dealt with properly and with respect then consider appointing your own lawyer.
Think of it this way; most policies cost a few pounds or are given to you for free. If these policies actually covered your costs of instructing a good, specialist, local solicitor chosen by you they would have to cost in the hundreds of pounds for a year’s policy. The fact that they do not shows what poor value you are actually getting and I have seen hundreds if not thousands of serious injury cases mishandled to such an extent that clients have insisted their cases are transferred to me forthwith.
This is all about difference in business models and consumer choice. If you want the person handling your injury claim to be poorly paid, poorly motivated and knowing that however badly they treat you they will still get thousands more cases next month then allow your insurers to lead you along. If you want the respect your case deserves appoint your own lawyer who must make you so pleased with their service that you will recommend a friend or family member to them next year because their livelihood depends on it.