Direct Line recently released figures which showed that one in three small businesses had to deal with a legal issue within the last 12 months.
Addressing legal issues can be expensive for businesses. They can also disrupt business operations diverting attention away from the day-to-day business management. As insurance experts, in our minds these figures highlight once again the need for businesses to make conscious buying decisions about their insurance cover.
What is legal expenses insurance and what cover can it provide?
Legal expenses insurance is designed to offer protection to businesses who find themselves facing a legal dispute. It is designed to cover legal costs associated with both defending or pursuing a legal issue.
Legal expenses cover also enables small businesses to access legal advice. Seeking legal advice before you act can help you determine the right decisions to take in accordance with the law. Unlike larger corporations, most small businesses do not have legal teams in house so having access to legal advice through a legal expenses policy can be invaluable.
The types of issues which legal expenses insurance can offer cover for include:
- Employment disputes and tribunals.
- Tax and VAT investigations
- Contract disputes
How do you take out legal expenses insurance?
Legal expenses insurance can be added to your overall small business insurance policy.
Firstly, it is important to know if you have a legal expenses insurance policy currently or not. If you do, it is always worth refreshing yourself on what the policy does and does not cover and ensuring that all details about your business are up to date and accurate.
If you don’t currently have legal expenses insurance, talk to either your broker or insurer about adding cover to your policy if it is something that could benefit your business.
What benefits can legal expenses insurance offer to businesses?
Businesses of all sizes can benefit from including legal expenses insurance as a part of their wider business insurance coverage.
Legal expenses insurance can bring benefits such as:
- Covering the costs of legal action – such as legal representation and costs associated with going to court
- Providing access to legal advice. As a small business you may not have a dedicated legal team available to you so advice from a third party is beneficial. Seeking legal advice before an issue arises is a good way to minimise risk in your business
- Peace of mind that should you face legal action, that costs to your business will be covered
At Anthony Jones we strongly believe that businesses should make conscious buying decisions when it comes to their insurance. As the Direct Line data that we referenced earlier shows, there is a high chance of a dispute with a third party such as a supplier, client or employee arising. Costs for legal advice and legal services are high and incurring a legal issue can disrupt the operation of your business and divert the attention of key employees, particularly if you are a small team. Keep this in mind when deciding whether legal expenses insurance is necessary for your business.
If you do face a dispute, legal costs can quickly mount up and put further pressure on business finances. Sadly, we are experiencing challenging times for many businesses who are operating in an unpredictable climate and facing unique legal risks linked to the COVID-19 pandemic. It is thefore important not to underestimate the impact a legal challenge could have on your business and the value legal expenses insurance could hold.
What is the value of risk management in reducing exposure to legal issues?
At Anthony Jones we encourage our small business customers to put risk management at the heart of everything that they do. We firmly believe that businesses of all sizes should understand the benefits that having a strong focus on risk management can bring.
Understanding the risks that your business could face through thorough risk assessments enables you to put policies and strategies in place to reduce your exposure.
This approach can be applied to legal risks – understanding what common legal disputes are, the potential for them to arise in your business and strategies to reduce their likelihood will put in you a better position than a business who has paid no thought to legal disputes. Of course, we know that issues will arise from time to time no matter how well you plan but protecting your business with legal expenses insurance can give you reassurance that you have access to legal advice and that the financial impact on your business will be minimised in such an event.
At Anthony Jones we invest a lot of time in getting to know our customers and their businesses and providing tailored business insurance solutions. We work hard to support our customers with risk management advice and believe this to be an invaluable element of the service we provide. Get in touch with us today on 020 8290 9080 or email us at firstname.lastname@example.org to discuss how we can help your business make the right insurance decisions.