ATE`s policies guarantee legal action regarding events that have already taken place. This insurance covers pre-existing litigation in which no proceedings have yet been initiated or no significant legal costs or expenses have been incurred. In the event of failure, ATE insurance protects the insured from the risk of having to bear their own costs and expenses. This type of coverage is generally only available for disputes with a high chance of success, where the insurer is likely to be able to recover its costs from the opposing party. It is available in Australia, Canada and the United Kingdom. In the United Kingdom, for example, lawyers dealing with personal injury cases “without profit or fee” may require their clients, whether defendants or plaintiffs, to take out ATE insurance to cover costs in the event of loss of the case. The payment of premiums, in particular in the case of a no-winnings, agreement may be deferred until the conclusion of the proceedings; Thus, in most cases, the premium itself is self-insured. This insurance is often offered by lawyers and claims management companies. The Legal Aid, Sentencing and Punishment of Offenders Act 2012 [6] (which was adopted on 1. April 2013), an important change was introduced concerning the recoverability of the premium: before the entry into force of the law, the policyholder could recover the premium paid from the losing party, while the premium must now be paid by the customer from the damage received. According to a survey commissioned by the Dutch Ministry of Security and Justice in 2016, lawyers who provided services through legal protection insurers performed best both in terms of perceived quality of services and based on peer review. [11] Legal expenses insurance has become more common outside Europe, notably in Canada, Japan, South Africa and the United States.
It is also native to Australia, Chile, China, New Zealand and South Korea. Legal expenses insurance should not be confused with coverage, which is often included in liability insurance. The purpose of third-party liability coverage is to protect the policyholder against losses resulting from negligent acts or omissions resulting in damage to another person, his property or interests. Therefore, the main purpose of liability insurance is to protect others against the consequences of the policyholder`s fault. In other words, liability insurance reimburses the other party for damage caused by a negligent act of the insured. It does not intervene to protect the property and interests of the policyholder, unless it is liable for damage suffered by the other party. It also assumes the legal representation and defence costs of the policyholder if the policyholder is sued for an accident because the loss of the liability claim would be detrimental to the liability insurer, as it would have to bear the financial consequences. However, the liability insurer does not help the policyholder to obtain justice as a plaintiff if he has suffered damage. There are different forms of legal expenses insurance, which have developed in accordance with national case law.
Traditionally, legal expenses insurance covers unforeseen events such as pre-event insurance (BTE). The event in this case is the incident that triggers the pursuit. However, in some countries (e.g. Australia, Canada, and the United Kingdom), it is also possible to get coverage called post-event insurance (ATE) after a dispute has been initiated. In the U.S. market, legal protection and assistance is often provided through legal plans or prepaid legal services, which in most cases are not insurance. In order to protect policyholders, national legislation on legal expenses insurance should be harmonised. The amount of coverage depends on the type of contract and is specified in the insurance conditions. If the policy is sold as part of home, auto or travel insurance (i.e. supplemental insurance), it will only cover disputes closely related to the purpose of the primary coverage (e.g. domestic claims such as disputes with neighbours or motor vehicle disputes in the case of motor vehicle legal expense insurance).
If legal expenses insurance is taken out as an independent and autonomous insurance product (stand-alone coverage), the range of services, scope and scope of coverage are significantly broader. Sometimes legal protection insurance is offered as a benefit to members of a trade union or association. In 2016, the Japanese market recorded a turnover of around 600 million euros, making Japan the fifth largest market after Germany, France, the United States and the Netherlands. In 2016, legal protection added to motor insurance accounted for 90% of the market share; Indeed, autonomous insurance has only been introduced in the last decade. In the United Kingdom, legal expenses insurance is mainly sold directly to the final consumer without intermediaries. The focus is on preventive dispute resolution by in-house lawyers. 80% of problems are solved internally. In its November 2017 report[12], The Law and Practical Ties of Before-The-Event (BTE) Insurance – An Information Study, the UK Civil Justice Council concludes that legal protection insurance provides many people with access to important legal assistance. To this end, LPI`s legal advice lines fill a real gap in the market and, in this regard, insurers are significantly improving access to justice in today`s landscape.
The report also finds a general lack of consumer awareness of the existence of legal protection coverage as such, as well as the extent of coverage. The report highlights that all stakeholders (lawyers, brokers, insurers, bar associations and the advisory sector) can actively contribute to raising awareness of legal expenses insurance. The report thus confirms the previous conclusions of two previous reports (Thematic Review of the UK`s Motor Legal Expense Insurance industry by the Financial Conduct Authority (FCA) of 2013,[13] Report of the UK Ministry of Justice published in October 2007[14]). The FCA found that many consumers were unable to distinguish between motor insurance cover (liability protection for liability damage) and motor legal protection insurance (pursuing claims for uninsured damage and protection from criminal prosecution). The 2007 Department of Justice report reveals that although 59% of the UK population has some form of legal protection insurance (whether they know it or not), less than one in four consumers have ever heard of BTE or ATE insurance. The ministry`s research estimates that 28 million UK adults actually have BTE insurance, mainly as a complement to another insurance policy. This form of insurance is the most widespread. It covers those who want to protect themselves against possible future claims, and it is purchased before the prospect of litigation. It supports the policyholder either by providing legal advice or even by representing him before or outside the courts. It also covers the costs and expenses of legal proceedings.
Legal protection insurers cover costs (e.g. lawyer`s fees and lawyer`s fees) incurred in the event of unforeseen circumstances. These costs usually include lawyers` and court fees, witness fees, translation costs or experts` fees. According to national legislation, legal expenses insurers also provide legal services and represent policyholders amicably or in court. The policyholder is usually protected in disputes in various areas of law such as contract law, labor law, consumer law and family law (including divorce in rare cases). The premium is normally paid annually. In South Africa, legal protection insurance is mainly sold directly to consumers without intermediaries. Legal protection insurers settle approximately eighty per cent of cases through in-house legal counsel. Prepaid legal services are relatively new to the United States. There are a variety of online legal services that offer legal plans that usually cover specific events such as drafting a contract or will, while legal protection insurance covers unforeseen events (such as labor or consumer disputes). Legal plans are mainly based on mass savings (e.g. Bulk purchase of legal services or in-house legal advice for a specific group of people (e.g.
members of a trade union) and not on the basis of insurance principles, i.e. they do not contain guarantees such as insurance, but provide coverage only until accumulated funds are exhausted.