In an attempt to widen access to legal advice in England and Wales, the Legal Services Board (LSB) has said that it wants to see legal expenses insurance promoted more widely to consumers.
The LSB states that there are around 3.6 million people with an unmet legal need involving a dispute each year but few are able to fund legal costs from disposable income. It goes on to say that while millions of households have legal expenses policies, only 7% of people who did not pay for legal services to deal with a contentious issue used their insurance.
Research by the Financial Conduct Authority (FCA) suggests that around 15 million adults may have legal expenses insurance. However, as it is often a standard feature of home insurance, many do not realise that they have it and have little understanding of how they could use the cover.
New research by the the LSB has shown that most people assume legal expenses insurance to be more expensive and restrictive than it actually is. This misconception limits the role legal expenses insurance could play in meeting unexpected legal costs. A third of those involved believed the cost of home legal expenses insurance to be at least double the typical cost of around £20-30 per year – comparable to the cost of travel insurance.
Another misconception was that the protection is limited to the product it is sold alongside. In fact, while a product purchased with home insurance might cover housing issues, it will normally also cover legal issues related to employment, injury, contracts and other more.
Steve Brooker, Head, Policy Development and Research at the Legal Services Board, 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.”
“The insurance industry has a role to play in better promoting legal expenses insurance to consumers and building stronger confidence in these products.”
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.
Read the research report here.