Legal Expenses insurance - Legal Pursuit and Defence Costs

Legal expenses insurance provides the ability to both pursue and defend your businesses legal rights in a cost-effective manner.

The risks in ‘doing business’ are ever-increasing in an environment of increased consumer rights, heightened compliance and regulatory risk, and increasing tendency of people, businesses and regulatory bodies to litigate or prosecute first rather than take a more conciliatory approach.

It is well known that the cost of legal expertise can be over-bearing to the point, it can affect the ability to both defend and prosecute your case. Legal Expense insurance allows a business, small or large, to obtain insurance to cover unexpected costs that can arise relating to contractual or license obligations as defined.

Though a business should ensure they have “Core” risks insured such as Liability, Professional Indemnity, Cyber and Management Liability (Directors) insurance where appropriate, Legal expense insurance can provide supplementary coverage, and additional coverage in certain areas.

Examples of Legal Expense costs insured are:

Pursuit and defence of contractual disputes with both customers and suppliers
Appeals against notices under WHS Acts; OH&S Acts; ACCC and similar legislation
Landlord-Tenant Property Disputes
Appeals against suspensions, revocations, alterations or refusal to renew Statutory Operations licenses
Pursuit of past employees breaching restrictive covenants
Privacy Act Data Protection disputes
Investigations by the Australian Taxation Office

Examples of Legal Costs not covered by Legal Expense insurance are:

Involving certain contract types such as Credit, Insurance, Building, Motor Vehicle
Franchise agreements
Employment contracts other than restraint clauses
Traffic offences
Non-payment of rent
Tenancy renewals or Property Purchases
Changes industry-wide to statutory operating licencing requirements
Driving Licenses

Typically, standard type policies provide defence cost coverage, however, the defence costs must relate to the type of coverage taken.

For example, Liability policies will only provide coverage for defence costs only that relate to injury or damage to Third Parties. For example, if a member of the public slips and falls in your premises, and you are sued for both injury and economic loss suffered by that person, then subject to you having Public Liability insurance, your legal defence costs will be paid by the Public Liability insurer.

Legal Defence cost provides additional coverage for Legal Pursuit and also Defence costs for some common issues that are not covered under standard policies.

Supply of Goods or Services

A retailer entered a contract with an event marketing firm to run some events to promote a new product.

Despite all invoices being paid in a timely manner, the marketing firm refused to complete the job originally agreed, stating that they had already exceeded the brief as set out in the contract.

The Insured then made a claim, and the insurer’s appointed lawyer wrote to the marketing firm requesting they comply with the agreement and complete the work. The marketing firm failed to comply, so the policy paid the legal fees of the lawyer to then sue the marketing firm which resulted in contractual damages being awarded to the insured retailer.

Debt Collection

The policyholder provided their cleaning service to a customer as agreed in a written contract and sent them an invoice for the cost of $25,000.

Their customer did not pay on the due date. The policyholder tried to contact the customer to see what was happening. After two weeks of no response from the customer, the policyholder contacted a Debt Collection Service provider.

The Debt Collection service contacted the customer who then claimed the services provided were not as requested and therefore were not paying. The Insured then sued the customer. The matter was defended by the customer but the court found in favour of the Insured who had their legal costs covered.

Statutory Licence Protection

The policyholder held a statutory licence to import a specific type of product. They were challenged by the governmental authority which claimed that their quota had been exceeded, and their licence was suspended depending investigation.

Without the licence the Insured was running out of stock and the business was under threat. The policy responded to pay for a lawyer to quickly intervene in the investigation and have the suspension lifted, allowing the policyholder to resume trading.

Landlord Tenant Disputes

The Insured leased an office and distribution centre which after ten months occupation suffered a serious and ongoing leak rendering part of the building was unusable. The policyholder asked their landlord to make the necessary repairs as per the terms of the lease.

The landlord refused, claiming it was the policyholder’s obligation to fix the problem.

The Insured made a claim, and a lawyer was appointed to negotiate a resolution with the landlord. When this failed, the lawyer progressed the matter to court and the judge found the repair was entirely the responsibility of the landlord who had to fix the building and pay compensation for the loss of use. The Insured’s legal costs of the process were covered.

For a no-obligation discussion about your Legal Expense cover, please complete our form (less than three minutes to complete generally) and we will promptly provide a quotation to you asap.

Legal Expenses insurance - Legal Pursuit and Defence Costs

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