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Should you add legal expenses cover to your home or car insurance?

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Legal expenses cover can be bought alongside your car or home insurance to cover the cost of legal action brought by you or against you.

For car insurance, this would cover you if you needed to sue another road user for negligent driving for example, or protect yourself against false claims by another driver.

Legal expenses cover for your home would cover you for legal costs relating to your home or your employment. For example, it could help if you are wrongly dismissed from your job, or if you have a property dispute.

The maximum you can claim is usually £50,000 to £100,000 and the cover typically adds around £25 to the annual cost of home or car insurance.

There are limitations: As with any insurance, there is a chance that insurers won’t fund the case. In general, they will only fund cases where there is a 51% chance of winning. Hiscox, for example, says it will not support, ‘any legal action where reasonable prospects of success do not exist at any point during the claim’.

If it’s your word against someone else’s, the claim may not be supported.

Insurance companies may also withdraw funding if they feel that a ‘reasonable’ offer has been made. Equally, you need to cooperate with the process at all times. Most policies also require you to use an approved solicitor. Hiscox is more flexible, saying that people can use alternative solicitors but they will only pay out the same as an approved solicitor would have cost. In other words, you can’t expect them to fund top legal counsel.

Claims need to be timely. If too much time has passed since the incident, or the amounts involved are too trivial, the insurer may not pay out.

As insurance goes, it doesn’t feature regularly on the Financial Ombudsman’s list of complaints. It attracted 715 complaints last year, out of 321,287 for insurance products generally.

Plenty of people will have legal insurance already and many may not realise it, either because they ticked the box with their home or car insurance, or because they have it through their employer. It is worth checking.

So is it worth it? The circumstances in which you would need it are relatively rare, but when you do, the costs involved are often very large. You may be able to get free advice through a trade union or through Citizens Advice, but nothing beats having a pot of cash to support a claim.

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