Most people with household insurance will have legal expenses insurance cover. They may not have asked for it, but it is increasingly becoming a standard aspect of household insurance.
On the face of it, the cover would seem to be a good thing to have. Whilst some types of claim are usually specifically excluded (for example, defamation actions), many common types of litigation, such as personal injury, are usually covered. However, in order to claim on the policy, most insurers insist that they will only provide cover if one of their own panel solicitors are used. These panel firms are usually few in number, large in size, are likely to be located on the other side of the country and have little interest in meeting you.
So why do the insurers insist that panel solicitors are used? One reason is money. Not only will the panel firm usually agree a substantially lower charging rate with the insurance company (and in practice there will often be an unwritten understanding with the insurer, that the solicitor will not seek to claim on the policy at all), but also the panel solicitor will actually pay a large referral fee to the insurance company for the introduction. The insurance company effectively therefore sells the claim on to the panel solicitor, which they would not be able to do if the client was allowed to choose their own solicitor.
But is there is another, more sinister, factor here? Would you wish to be represented by a firm of solicitors chosen for you by the insurance industry? Would turkeys vote for Christmas? Over the last few years there has been a concerted effort by the insurance industry, to gain control of the personal injury market in this country. Controlling who represents claimants is a significant part of this process.
The UK has a regulation – the Insurance Companies (Legal Expenses Insurance) Regulations 1990 – which says that insurers are not entitled to restrict a client’s freedom of choice of representation once court proceedings are issued. However, as proceedings are not issued in the vast majority of claims, in practice this means that the insurance industry DOES attempt to restrict freedom of choice of representation in the vast majority of cases.
However, there may be some light at the end of the tunnel. A case decided by the European Court of Justice in 2009, suggests that the 1990 Regulations mentioned above, which were intended to bring into UK law a European Council directive on freedom of choice of lawyer, may in fact provide a more restrictive interpretaion than the European Council directive intended.
So what should you do if you wish to make a claim and you think that you do have legal expenses insurance cover? The best course of action is to speak to a specialist solicitor, chosen by you, at the earliest opportunity. Solicitors are under a duty to fully advise clients on all aspects of legal costs and methods of funding a claim and they should be able to advise you whether or not your freedom of choice of representation has been restricted by the insurance company. In many cases we have been able to advise clients that their freedom of choice has NOT been restricted.