In a standard, or package, business insurance policy there will usually be an element of liability cover. The three main types are employers, public and products.
These liability covers provide for a “limit of indemnity” either any one claim or in any one period of insurance. You, as a business, could face a claim under one of these, say for damage caused by a product you have supplied or work you have done, or an injury to an employee.
The purpose of the cover is to pay for the consequences of the damage. Within this limit of indemnity, or in addition to it, will be included legal fees. Both yours and the claimants, if successful.
But what happens if you face a legal challenge for something that is not covered under one of the tri-liability covers? This is where you need to have commercial legal expenses insurance. This is a separate cover, provided by a specialist insurer.
You have two options, either take out a separate policy or get a policy that actually includes this cover.
As we are becoming more and more litigious in the UK, with no-win, no-fee solicitors on the prowl everywhere, it is easier than ever before for the “man in the street” to raise a legal claim against any business or public sector body.
Whether they will admit it or not, the vast majority of these claims are made for only a few thousand pounds, in the hope that insurers will simply pay them as it is cheaper than fighting the case. But, things are changing slowly and insurers are happier to challenge more and more. Every business is different and you need to consider exactly what cover you need, and can afford. Speak to your broker about the different options and, depending on your trade, you can add in a good quality cover for as little as £50 per year.