As part of many, but not all, business insurance policies, you can have separate cover for commercial legal expenses.

It is quote an important distinction, but the title tells you exactly what you get, which is legal expenses. For any policy, in the UK, insurers always have the option of taking control of any claim. What this means is that, if they want to they can appoint their own builder to fix your roof, supply to replace your sofa or solicitor to fight any legal costs claim against your business.

Legal expenses does not mean that you can appoint the most expensive barrister and their legal team in the land, to fight any and every dispute you may have. What it means is that as soon as you become aware of the likelihood of a claim being made against you, you need to notify your insurers and let them decide what they want to do.

It may well be that they come back to you and ask you to get a fee quote from a local solicitor, but, in over 95% of cases, what they will do is to appoint a solicitor from a panel that they have worked with before and have agreements with. This way, the insurers are fully aware of what the costs are likely to be and the solicitors are used to dealing with claims of this type.

One of the major parts of commercial legal expenses insurance, is employment disputes. There are hundreds, if not thousands of employers every month who suddenly realise that a relationship, that they had with an employee, has deteriorated to such a degree that they may have to go to a tribunal.

To be fair, the legal system is OK in that it forces employers and employees to go through a formal greivance process before it gets to court. But boy, if you do not resolve it at grievance stage, then the costs will start to rack up.

This is where a) you want to have a policy that backs you up and b) your insurers are not going to just send an open cheque to pay a huge solicitors bill.

As with every single claim, you must, must, must notify your insurers, or indeed your broker, as soon as you aware of anything which may give rise to a claim. Even if you think there is a 0.1% chance of that bad appraisal with employee x turning into a full blown three week employment tribunal, you have to speak to someone about it. If in doubt, get on the phone.

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.

Business insurance is a strange product, you are buying something that you grudge paying for and you hope that you will never use. What you don’t want is someone to sell it to you as a result of scaremongering. Of course there are the once in a blue moon events that really will scare you if you think what the potential cost could be without insurance.

One of the lesser purchased products is commercial legal expenses insurance. As an employer, one of the hardest things to deal with is the legislation associated with actually employing staff. Not only does it change very often, you are also faced with the potential of extremely costly law suits from disgruntled employees.

Imagine the scenario were an employee is off sick for weeks, and then you receive a solicitors letter alleging that you have discriminated against the employee in some way. You could be faced with a huge bill, even if the employee doesn’t have a “legal” leg to stand on. This is where you need legal expenses cover. As soon as you receive such a letter, or become aware of the potential of a claim, you just need to notify your insurers. They will want to appoint their own panel of solicitors to deal with the claim, so what you must not do is to appoint your own solicitors as you may not receive full reimbursement.

The two things to remember are firstly you must buy the cover and secondly buy it from an independent business insurance broker who will help and guide you every step of the way.