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Do you have Legal Expenses Insurance? If you make a claim, here’s some legal jargon you might see.

If you’re a business owner with a Legal Expenses Insurance (LEI) policy and a lawyer is appointed for you, there’s often some commonly used terms in legal proceedings that you might not be familiar with. Here’s a breakdown of some of the most common terms used:

 
  • Prospect Assessment
    Your appointed lawyer will be required to carry out a prospect assessment, where they review the facts and documentation to work out how strong your defence is. In short, they’re assessing against legal tests whether your case as the defendant has a reasonable chance of success, which is stated as a requirement in your LEI policy.
 
  • No Reasonable Prospects (NRP)
    If you hear “the case is NRP” or “prospects are below 51%”, it means your appointed lawyer isn’t satisfied that your defence is more likely than not going to succeed. This could impact your insurance cover. If this happens, we’ll always provide and explain your options so you can decide on the best next step.
 
  • Compensation Award Cover
    Some policies cover compensation if your defence doesn’t succeed at trial (you lose your case). This is called Compensation Award Cover. Your insurer will confirm if it applies once they have reviewed your Prospect Assessment — and it’s important to notify them early of any dispute or before you make certain business decisions, so cover isn’t affected.
 
  • Limit of Indemnity
    The indemnity is the total amount your insurer will pay towards legal costs. Limits can range from £50,000 to £1 million+. Your insurer will let you know what limit of indemnity you have at the outset of your case; your lawyer will keep you updated as costs progress.
 
 

Tip for businesses

Before acting on a legal issue, contact your insurer as soon as a dispute arises — early steps can make all the difference.

 
 

Contact your insurer as soon as a dispute arises — early steps can make all the difference.

Amy James - ARAG Law

 
 
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Disclaimer - all this information was correct at the time of publishing