Legal insurance
Legal fees can be high when litigation happens. Legal protection insurance could cover a portion of the costs. Should you take out this type of insurance?
Legal insurance is a form of damage (property and casualty) insurance that is often sold as a complement to automobile or home insurance. It is also called legal expense insurance, legal fees insurance or legal protection insurance.
Take the time to understand and learn about the limitations and exclusions under this type of insurance before you purchase it. Make sure the person or company offering it to you, in person or over the Internet, is authorized to do so by calling the AMF’s Information Centre or checking the Register of firms and individuals authorized to practise.
Usually, legal insurance lets you hire a lawyer or notary of your choice to advise you, initiate legal proceedings or represent you in court.
Some situations where this type of insurance may be used
Check what the insurance covers before purchasing it. It may not cover all of the situations described below or it may also cover other situations, as well.
Consumer matters
- A person who signed a contract with you is not abiding by its terms.
- A merchant does not want to honour the warranty on a product or service you purchased.
- You are the victim of false or misleading advertising or a vendor has made misrepresentations to you.
- You buy a home and discover latent or construction defects.
Bodily injury
- You slipped on a poorly maintained floor and hurt yourself.
- Your child suffers an injury at school as a result of unsafe playground equipment.
- You are the victim of a medical error.
Labour
- You are harassed in the workplace or wrongfully dismissed.
Family matters
- You want to use family mediation services.
Wills and protection mandates
- You need a court to probate a will when someone dies. Legal insurance does not cover the drafting of a will, but it may cover the cost of consulting a lawyer or notary prior to drafting one.
- You need a protection mandate (formerly, a mandate in case of incapacity) homologated. Insurance does not cover the drafting of a mandate, but it may cover the cost of consulting a lawyer or notary prior to drafting one.
Legal insurance doesn’t cover everything
It contains exclusions and limitations. For example:
- It doesn’t cover cases you knew about prior to buying the insurance.
- Generally speaking, it comes into effect 60 days after being issued.
- Certain areas of law are excluded from most contracts. For example, divorce, separation, spousal or child support and child custody cases are rarely covered by this type of insurance. Criminal and penal cases are generally not covered.
- There may be a deductibleThe deductible is the initial amount for damages that the insurer does not pay.
For example, with a deductible of $500, if you claim a total of $20,000 in damage coverage, your insurer would pay $19,500. . - It may pay only a portion of the costs (co-insuranceCoinsurance is the percentage of the cost of an insured's claim that is assumed by the insurer once the deductible is paid.
Let’s say that your policy provides for a $50 deductible and an 80% coinsurance. You submit an eligible claim to the insurer for $1,000. The insurer has you pay the first $50 (deductible). On the remaining $950, it will reimburse you 80%, i.e., $760. Therefore, you pay a total of $240. ) (e.g., 75% to 80%). - It may impose limits (e.g., some insurance covers up to $5,000 per case and may also cap coverage at $10,000 to $15,000 per year).
- The insurer may determine a maximum hourly rate for the services of the lawyer or notary you choose.
Before purchasing insurance, make sure with your representative or firm that it is suitable for you (price, coverage, limits and exclusions).
End of the insightLegal assistance
Don’t confuse legal insurance with legal assistance.
Legal assistance is not insurance. It gives you access to a legal helpline for over-the-phone advice from a lawyer or notary.
This service is offered free of charge when you purchase other types of insurance. For example, some insurers offer this service if you take out home or automobile insurance with them. Other insurers charge a premium for it (e.g., $10 per year).
Below are some examples of situations for which you may want the advice of a lawyer or notary:
- You buy a used car and it stops starting after just a few weeks of use. You want to know what remedies are available to you.
- You want to know your rights in a dispute with a neighbour.
Some differences between legal insurance and legal assistance
Type | Principaux services offerts | Coût de la protection |
|---|---|---|
Legal insurance | Depending on the terms of your contract, allows you to hire a lawyer or notary of your choice to advise you, initiate legal proceedings or represent you in court if necessary. | Generally, $30 to $100 per year, depending on the insurer and what is covered. |
legal assistance | Provides over-the-phone advice from a lawyer or notary at no charge. You don’t benefit from the services of a lawyer to defend you in court if necessary. | This service is generally offered free of charge when you purchase one or more types of insurance. |
Points to consider before purchasing legal insurance
- Is it, in fact, legal insurance and not a legal assistance service?
- What services are covered?
- How much does the insurance cost?
- What limits and exclusions apply?
- How much is the deductible and is there co-insuranceCoinsurance is the percentage of the cost of an insured's claim that is assumed by the insurer once the deductible is paid.
Let’s say that your policy provides for a $50 deductible and an 80% coinsurance. You submit an eligible claim to the insurer for $1,000. The insurer has you pay the first $50 (deductible). On the remaining $950, it will reimburse you 80%, i.e., $760. Therefore, you pay a total of $240. ?
