Legal expenses insurance: Price not an indicator of quality

There is “no correlation between the price of legal expenses cover and the quality of these products”, according to Legal Services Board (LSB) research.

Conducting a mystery shopping exercise, focused on insurance products available through price comparison websites, the regulator found that higher-priced products did not necessarily offer consumers more than cheaper ones.

Research suggests many people expect legal expenses insurance to be more limited and expensive that it actually is, and this is limiting the protection it could offer consumers, the LSB said. An estimated 3.6 million people have an unmet legal need involving a dispute each year, and few consumers can meet unexpected legal costs from disposable income.

Since legal expenses cover is either a standard feature of home insurance policies or sold as an add-on, the LSB said consumers did not freely choose their legal expenses policy. This means “they are badly placed to drive improvements in quality through their purchasing behaviour”.

The LSB is calling on the insurance industry and legal service providers to support consumers by raising awareness of legal expenses insurance, incentivising better quality products and building trust through greater transparency.

Steve Brooker, the LSB’s head of policy development and research, said: “Consumers need better information to support them to exercise choice and purchase good quality legal expenses insurance suitable for their needs.

“The insurance industry has a role to play in better promoting legal expenses insurance and to build stronger confidence in these products. Legal expenses insurance seems to be widely owned but little used, meaning that it’s not fulfilling its potential to close the access to justice gap.”