Legal expenses insurance could help tackle unmet legal need 

A greater uptake of legal expenses insurance (LEI) among consumers has the potential to fill some justice gaps and tackle some of the country’s unmet legal need, according to recent research from the Legal Services Board (LSB).

The oversight regulator found that consumers who do not have LEI greatly overestimate how expensive it is, dismissing it as “unnecessary additional expenses” when buying insurance through comparison websites. Once they understood the product better, however, they were more interested.

The LSB’s report was based on the views of a week-long online discussion forum made up of 46 adults. Less than half the group, 19 consumers, said they had LEI. Three were unsure whether or not they did.

Only four of the 24 who did not have LEI were “in the right ballpark with their cost estimate” of £20-£29 a year. Most assumed the cost would be £50 a year or higher, with many instinctively dismissing it as an unnecessary add-on and a way for insurance companies to make more money.

Among the minority who had LEI, the two main reasons for having chosen it were peace of mind and because they had, or knew someone who had, needed legal cover in the past.

“A small number also mentioned the fact that it was a relatively low-cost purchase which added to its appeal,” the LSB noted.

The main barriers were not seeing the relevance of it to their lives, assuming it was not affordable, lack of trust in the policy paying out and lack of understanding of what it covered.

“Although some were confident that they fully understood the cover provided by LEI, it was clear that many consumers assumed that it only related to legal issues connected to the type of main insurance being bought (i.e. housing-related issues with home insurance, and driving-related issues with motor insurance).”

Researchers concluded that once people were given more information on LEI, they generally found it appealing, considering it to be good value for money and encompassing a wider range of issues than they had previously assumed. The report recommended addressing the “low levels of awareness and understanding” in order to increase take up.

The LSB has outlined its ambition that, in 10 years’ time, most households have an LEI policy or other mechanisms enabling them to access a wide range of legal services free.

Steve Brooker, policy development and research head at the LSB, commented: “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.”