Legal expenses insurance: LSB report calls for wider advertising to consumers

The Legal Services Board (LSB) has called for legal expenses insurance to be promoted more widely as part of a programme to widen access to legal advice in England and Wales. 

Research conducted by Community Research on the LSB’s behalf revealed most survey participants assumed legal expenses insurance is more expensive and restrictive than it really is.

The LSB believes consumers are missing out on insurance that could help cover unexpected legal costs, and at a lower cost than most may expect. The typical annual cost of legal expenses insurance is around £20 to £30; however, a third of participants believed the cost of home legal expenses insurance to be at least double that. 

It said an estimated 3.6m individuals have an unmet legal need involving a dispute each year, and few consumers can meet these unexpected legal costs. While many households have legal expenses policies, it appears these are rarely used. Only 7 per cent of survey participants who did not pay for legal services when dealing with a contentious issue used insurance.

According to research by the Financial Conduct Authority, around 15m adults may have legal expenses insurance. However, since it can be a standard feature of home insurance many do not realise they benefit from it. 

The LSB’s research showed participants had little understanding of legal expenses insurance products and how they could be used. The process of selling legal expenses insurance as an ‘add-on’ to existing cover was also found to be “disengaging”.

It was also found another misconception is that the protection is limited to the product it is sold alongside, whereas a product purchased with home insurance might cover a range of issues including property, employment, injury, contracts and more.

The LSB believes the misconceptions around cost and restrictions limit the role such insurance could play in meeting unexpected legal costs, which may boost instructions. 

Head of policy development and research at the LSB, Steve Brooker, said: “While legal expenses insurance is not a fix-all, it has the potential to protect more people from unexpected legal costs and is cheaper and covers more issues than many consumers think.

“People often need legal help when they are at their most vulnerable, for example when facing a housing or employment issue. Legal expenses insurance can provide consumers with the peace of mind that the cost of legal advice and representation will be covered.

“We see legal expenses insurance or similar products as one of the ways to enable more people to access legal services free at the point of need.”
Brooker called on the insurance industry to play a role in better promoting legal expenses insurance to consumers and “building stronger confidence in these products”. 

He added: “Addressing unmet legal need in society is a key component of the LSB’s Reshaping Legal Services sector-wide strategy. The LSB will continue to work with the insurance industry and others to increase understanding of legal expenses insurance among consumers”.