Legal expenses and home insurance

Do you need to include legal expenses cover when you take out home insurance? Take a look at our guide before deciding.

Key points

  • Legal expenses cover is not compulsory on home insurance but may be included as standard or as an added extra
  • Policies can take on the legal expenses involved in pursuing uninsured losses
  • For your insurer to take on a legal claim on your behalf, it'll need to be convinced that your case has a reasonable chance of success
  • Legal expenses does not cover compensation, and you should look out for exclusions

Legal cover is not compulsory when taking out home insurance, but it is included as standard on some deals, or it can be purchased as an add-on to your policy.

On 25 February, 2016, Gocompare.com analysed 421 home contents policies and 412 buildings insurance policies listed on the matrix of independent financial researcher Defaqto and found that 25% of them included legal cover as a standard feature.

A total of 67% of buildings policies and 65% of contents policies offered this cover as an optional extra for an additional cost, the price of this ranging from £4.12 to £45 with most costing somewehere between £15 and £30.

Claim limits also varied widely, ranging from £10,000 to £150,000.

Read your terms and conditions to see what protection you have and consider what you feel you need, and also look into cover you may have elsewhere.

For example, if you're a trade union member you should expect some legal help if you're involved in an employment dispute, while your bank account or credit card may offer the elements of legal cover that you require.

If you compare home insurance through Gocompare.com, your results page will allow you to filter the table so that you only see policies that include legal assistance.

What's covered by home insurance legal expenses?

Legal expenses cover is designed to protect you against the costs of being sued or having to make a claim against someone else in a range of circumstances.

There can be nothing more frustrating than knowing your rights have been infringed but having to meet the up-front costs of a claim. This is when legal protection can be invaluable.

Policies can take on the legal expenses involved in pursuing uninsured losses - recruiting solicitors, barristers and/or expert witnesses, for example.House

Always read your policy's terms and conditions, but in addition to covering legal proceedings arising from the insured home - such as nuisance, squatters or trespass - policies can include:

  • Personal injury
  • Employment disputes, including unfair dismissal
  • Provision of inadequate service
  • Faulty goods
  • Boundary disputes and other problems with neighbours
  • Enquiries into your tax affairs
  • Medical negligence
  • Legal defence
  • Property protection
  • Jury service

Legal issues around driving are typically excluded and instead covered by motoring insurance products rather than your house insurance - read more about legal assistance and car insurance in our guide.

Many insurers will offer a legal helpline and - when you consider that an hour of a solicitor's time can cost hundreds of pounds - this alone may be worth the cost of the policy.

If I take out legal expenses cover, am I guaranteed legal help?

For your insurer to take on a legal claim on your behalf, it'll need to be convinced that your case has a reasonable chance of success.

Two common exclusions from legal expenses insurance are matrimonial disputes and libel cases

The policyholder is also likely to be obliged to accept a reasonable settlement should this be offered.

Decisions on such matters are generally made by the insurer's own solicitors, but disputes can be raised with the Financial Ombudsman Service.

For more information on these areas, visit the legal expenses page on the Financial Ombudsman Service's website.

What's not covered by legal expenses insurance?

As always policies vary and you should check your terms and conditions, but look out for limits that are placed on the amount of legal expenses that will be paid out.

If you're being taken to court you should expect a policy to cover legal fees and legal costs awarded against you, but don't expect it to cover any compensation you're ordered to pay.Briefcase and files

If you want protection in this area, consider liability insurance.

Two common exclusions from legal expenses insurance are matrimonial disputes - meaning that you're unlikely to be covered for the cost of a divorce - and libel cases.

Policies will not offer cover for disputes that arose before the insurance was taken out.

Finally, if you're considering using your legal expenses policy for a minor issue, check your terms and conditions to see whether it will have an impact on your no-claims bonus.

Analysis

"Legal expenses insurance bought with or alongside your home insurance can provide valuable cover," said Gocompare.com's Ben Wilson.

When you take the high cost of legal fees into account, access to a free legal helpline alone may be worth the cost of the policy
Ben Wilson, Gocompare.com

"It's designed to pay for legal costs in pursuing a court case or claim such as a boundary dispute with a neighbour or a personal injury claim - which otherwise you may be unable to afford.

"Bought alongside home insurance, cover is relatively cheap, but premiums and what's insured varies considerably between policies, so it's important to compare both the cost and content of the policies on offer.

"In addition to checking exactly what's included in a policy, it's also important to know what's not covered.

"Generally speaking, legal services policies bought or included with your home insurance don't cover family law disputes, such as divorce. Driving-related issues will also be excluded.

"However, legal expenses policies generally give you access to a free legal helpline through which you can get advice about all types of disputes - when you take the high cost of legal fees into account, access to this helpline alone may be worth the cost of the policy."

By Sean Davies