Area of Law: Business Law
Answer # 0257
Legal Expense Insurance (LEI)Region: Ontario Answer # 0257
What is Legal Expense Insurance?
Legal expense insurance (LEI) policies are insurance products designed to protect policyholders against the legal cost of potential disputes. These policies offer policyholders access to legal advice, representation and legal services cost coverage. LEI policies cover costs incurred in the management of the litigation process from investigation, pleadings and discovery, to pre-trial mediation and arbitration, to settlement, and if necessary to appeal. In civil cases, LEI policies cover policyholders regardless of whether they are plaintiffs or defendants.
LEI is available for both individuals and businesses.
What types of businesses need legal expense insurance?
All types of businesses and organizations can benefit from LEI, including:
- SME (Small to Medium Business Enterprises)
- Sole Proprietorships
- Groups and Clubs, including Sports Clubs
What types of situations are covered by LEI?
LEI policies for businesses generally cover situations such as:
- Employment disputes
- Legal defence
- Statutory license protection
- Contract disputes
- Property protection
- Bodily injury
- Tax audits and appeals
- Trial defence
- Court attendance expenses
Most legal insurance products do not cover criminal or family law disputes.
Legal advice included in LEI policies
Most LEI policies usually provide unlimited legal advice by telephone on any legal issue, including:
- Employment issues
- Small claims matters
- Equipment leases
- Joint ventures
- Landlord/tenant disputes
- Bad debts recovery
- Customer complaints
- Vendor issues
- Creditor harassment
- Government compliance
- Licenses or Permits
- Tax or CRA issues, such as audits
- Defence against certain criminal prosecutions
- Verbal contracts
- City / Municipal zoning
- Workers Compensation
Types of LEI
In Canada, there are two main types of LEI:
- Before the Event (BTE) legal expense insurance: BTE is insurance that covers the legal costs of potential litigation before a dispute has begun. Legal costs covered often include lawyer’s fees, expert witness’ fees, court fines and costs, and adverse costs(opponent’s legal costs and expenses) if a judgment for costs is made at trial.
- After the Event (ATE) legal expense insurance covers litigation costs to protect business owners against the legal cost of disputes or claims that have already occurred. A common type of ATE policy is one that covers bodily injury cases. ATE policies guarantee policyholders access to legal advice, representation and legal services cost coverage. It also usually includes the payment of adverse costs (opponent’s legal costs and expenses) if a judgment for costs is made at trial. ATE insurance is usually purchased by people who do not have before-the-event insurance.
Lawyers may require their clients to buy ATE insurance so that the legal costs will be covered if the case is lost. ATE insurance is often sold to clients through their law firms, lawyers and claims management companies. ATE policies provide benefits to both the law firm and the client because there is certainty that the legal fees and disbursements (including investigatory expenses) will be paid. Therefore, ATE empowers both lawyers and clients to proceed with more cases, knowing that the legal disbursements are secured.
For more information about legal expense insurance, or to purchase a policy, contact Ai Legal Expense Insurance.
Is your business protected?
Whether you’re a start-up or well-established business, life insurance can help protect your business so that you can still achieve your business goals in the event of the unexpected. It’s important to get professional advice for your unique situation, and it is more affordable than you think. For a free consultation and quote, contact an Empire Life Insurance advisor today.
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