The short answer
Legal protection insurance covers dispute costs in defined areas and under defined conditions. It does not fund every dispute, and taking out a policy after a dispute has arisen will generally not cover it. Present an organised file and ask for the insurer's position before incurring costs.
Disputes affecting an SME
A dispute with an employee, a disagreement with the landlord, an invoice challenged by a customer, a defective delivery from a supplier, a dispute with a social insurance provider: needs vary. Policies are often structured in modules; check that they include the areas relevant to you.
What to read
- Areas of law and modules included
- Territories in which disputes are covered
- Triggering event and the date used
- Any waiting period after taking out the policy
- Prior agreement on costs and free choice of lawyer
- Amounts and thresholds specified in your policy
Legal protection and business liability insurance: two roles
When a third party claims damages from you, your business liability insurer assesses the claim and may defend the business against unjustified claims. Legal protection insurance applies in other cases, for example when asserting your own rights. The two complement each other; notify the relevant insurer, or both if in doubt.
By way of illustration, the AXA-ARAG general terms and conditions (GTC) of 2021 structure benefits by area of law and insured event; this dated edition does not describe the current market.
Good practices
As soon as a serious disagreement arises, gather contracts, correspondence, invoices and a chronology. Notify the insurer and obtain its position before instructing a lawyer or commissioning an expert assessment, except in an emergency. Costs incurred without agreement may remain payable by you. Once you receive the insurer's position, keep it with the file: it specifies what is covered and for which stage of the proceedings.
Frequently asked questions
Can I take out cover now for a dispute that is beginning?
As a general rule, no: a dispute that has already arisen is not covered by a policy taken out afterwards. Legal protection insurance needs to be arranged before disputes arise.
Can I choose my lawyer?
Policies differ on this point. Read the relevant clause and seek the insurer's agreement before instructing a lawyer.
Does my business liability insurance already defend the business?
Your business liability insurer may assess and contest a third-party claim. Legal protection insurance is intended for asserting your own claims or for other areas of law.