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Half of motorists do not regard legal expenses cover as useful26 June 2011by Donald MacKenzie In a national survey of over a hundred respondents, direct car insurance and price comparison website car-insurance-uk-supermarket.co.uk has found that only a half of motorists (49%) regard taking out legal expenses cover with their car insurance as useful. Just a fifth (20%) regarded legal expenses cover as essential, while more (29%) said it was useful but not essential. A fifth (19%) had a neutral attitude towards legal expenses cover, regarding it as neither good nor bad while a third (33%) regarded it as either better avoided (15%) or a waste of money (18%). If these proportions are representative of the population as a whole then as many as 24 million drivers in this country will not automatically buy legal expenses cover when they renew their car insurance. Most car insurance policies do not include legal expenses cover as standard. With the ever-increasing cost of car insurance, most motorists, clearly, are not looking to increase their costs by taking out legal expenses cover at an additional cost of, typically, around £20. Some are ignorant as to exactly what legal expenses cover provides and probably take the view that if it's an optional extra it cannot be essential; so they decide to save their money and do not opt-in for it on an insurance quote form. Others may take the view that if they had to make a claim after being injured in a vehicle accident that they could go down the well-publicised 'no win, no fee' route which is not currently associated with any legal costs to the claimant. Most motorists will be unaware, however, that the Government has accepted the recommendations of Lord Justice Jackson's Report on the cost of civil litigation in England and Wales and will soon ban recoverability of a claimant's lawyer's success fee from the car insurance company liable for the compensation. That success fee will soon be paid out of the damages awarded to the claimant, capped at 25% of the award. While general damages awards will be raised by 10% to help pay for this, many injury lawyers are saying that to maintain business they will need to minimise or discontinue success fees. While their hourly rates and other costs, such as fees for expert reports, will be paid by the defending car insurance company even where the claimant loses (as long as the case is considered reasonable), the claimant may still be liable for other legal costs (known as disbursements) that can run to many thousands, a quarter of them being over £5,000, and, potentially, more than three times this. Because injury lawyers will have less money in their reserves to absorb the cost of disbursements owing to a drop in success fees, they are likely to need to pass these costs on to the claimant. Without legal expenses cover, the injured motorist will have to pay all of his lawyer's disbursements from the damages award. With legal expenses cover (that typically provides up to £100,000 of cover) he would not face this cost. It is partly because of the last point that it is now more important for motorists to take out legal expenses cover but there are other advantages to having legal expenses cover as it provides you with assistance to recoup uninsured losses including repayment of your excess, the cost of car hire or even extra phonecalls to the insurer. Legal expenses cover is usually provided as an optional extra but in view of the pending legislative changes as outlined above, it is wiser to no longer see it as such, as, failure to include it with your car insurance could lead to the loss of up to £100,000 in legal fees if you or a passenger were injured in an accident. Lord Justice Jackson in his (final) report stressed the need for 'before the event' insurance (legal expenses cover) in the light of his recommended changes and it is these very changes that now form the core of a current Government white paper. full survey report |
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