What is commercial legal expenses insurance?
It is commercial legal protection insurance for businesses and the self-employed that can be used in a range of situations concerning your business activities.
Also know as business legal expenses Insurance, this cover pays for the cost of legal defence (or offence if you're the one bringing a claim against a third party) as long as you have over 50% chance of winning.
What does commercial legal expenses insurance cover?
The core element is to provide legal assistance and defence at no cost to you when you're facing a claim against you or if you wish to bring a claim against a third party.
Each insurance provider offers a slightly different cover. Some covers are very focused around one issue, e.g. IR35 legislation. Others respond to a wider variety of business legal and tax issues:
- Commercial disputes
- Legal claims against your business
- IR35 and other HMRC investigations
- Criminal prosecutions
- Negative PR
- Compliance & regulation issues
- Unpaid invoices
Do I need commercial legal protection insurance?
Business legal expenses is not considered an essential cover and it is never contractually required.
Therefore when deciding whether you need it, let your industry, customer type, business partners and industry regulations be your guide.
Take estate agents as an example. Facing an unpaid invoice following a sale below the asking price or a treat of a fine from the regulator is very common. These types of legal threats will not be covered by professional indemnity or public liability insurance.
Contract disputes are common across all industries and even though you have a strong position, you may not be able to pursue a claim against your client or business partner due the high legal costs.
On the other hand with business legal expenses insurance, you have access to legal advice and defence if your case is strong.
How much is business legal expenses insurance?
The costs usually starts from £25 per year but it can be as high as a couple of hundreds, depending on the provider.
At Suited we included commercial legal expenses with every subscription because we consider it essential cover for small business and self employed professionals.
They are the customer types who would struggle to meet the cost of a solicitor or have the time and resources to chase bad debt.
How does commercial legal expenses cover work?
Our Suited product is called Business Legal Protect and it will provide you with qualified legal advice and assistance.
The legal team will consider your situation and recommend the best steps. If your claim is accepted, the legal team will guide you through every step from the outset and when they consider it prudent, they'll to take over to represent your best interest.
However, with Business Legal Protect you can also initiate a claim against a third party.
If you are facing a claim against you or want to pursue a claim against a third party, your chances of success must be greater than 50%. This is often expresses as a reasonal prospect of success.
The key phrase point is "a reasonable prospect of success".
The chances are determined by the insurance provider legal team. Once you've submitted all the details, they'll consider the claim and let you know whether they agree to represent you.
Additional benefits with Suited:
You'll have access to free and unlimited access to:
Telephone tax & commercial legal advice
Negative PR assistance hotline
Counselling by phone for you and your staff
Legal template library & document generator
Identity theft assistance
How much commercial legal expenses insurance do I need?
Based on the fact that most disputes can be ironed out through mediation, £100,000 should be plenty.
In the rare event of having to defend your business in the court of law, the amount should cover a substantial part of your legal costs and, of course, how much you'll need to spend will probably depend a lot on how far you're prepared to go.
Remember that compensation or additional tax if you are found liable is not covered by Business Legal Protect.
Suited Business Legal Protect does cover the fees associated with mediation and will help you find the right professionals who'll guide and represent you throughout the whole process provided your case meets the 50% rule.
