Have you ever found yourself in a situation where you weren't entirely sure about the legal implications a specific situation holds for your business? Whether it was a dispute over a contract, a regulatory compliance issue or something else entirely.
If you're a business owner in Ontario, looking into legal services insurance and what it can offer you is worth your time. You may not have heard about legal services insurance before, and that's understandable—it has only been available in Canada for less than a decade. It has recently started to become a more popular option for commercial insurance packages.
Legal services insurance offers some significant benefits that are unavailable with standard business insurance coverage. Once they realize exactly what it can do for them, most business owners are eager to add it to their existing insurance package. Legal services coverage is right for businesses of all sizes, industries and descriptions. Find out more today by contacting a knowledgeable insurance broker at Morison Insurance.
Suppose you, as a business owner, have legal action brought against you. In that case, legal services insurance (also known as legal expense insurance) can provide legal advice on such matters as:
Legal services insurance also allows you to access certain legal services without needing to file an insurance claim. Exactly which additional services are included can vary depending on your insurance provider and policy. Depending on your insurance company and how your policy is written, you may be able to access services such as legal document review, draft letters and case-specific research. Most legal services insurance policies will give you access to unlimited legal advice on business matters over the phone for queries related to issues such as:
This is a huge advantage because most business owners have not been to law school and don't necessarily have the expertise to interpret these matters to choose the best course of action. With legal services insurance on your side, you can call up a qualified lawyer whenever you need to and get some advice to get you on the best path without having to file an insurance claim and make a mark on your claims history.
You may be wondering why your business needs this type of insurance. Legal services are sometimes necessary. Suppose you have yet to encounter a situation where you wish you could have called an attorney for expert legal advice. In that case, you may need clarification on whether this coverage is really right for your business.
Here are the four main reasons to consider investing in legal services insurance.
It's not uncommon for business owners to assume they'll never need legal services because they'll just be careful, operate their business honestly and avoid legal proceedings. Of course, it rarely works out that way in reality because no matter how thorough and conscientious you are as a business owner, there's no way to avoid every single mistake, mishap or incident that could lead to someone taking you to court—and you may end up in a situation where you are the plaintiff rather than the defendant.
But it's not just about lawsuits. While operating any type of business, dozens of legally-related matters could leave you vulnerable if handled incorrectly. With legal services insurance, you can speak to legal assistance lawyers about complex or simple matters and get sound advice on the best way to proceed. Every business requires legal contracts, permits, licenses, and much more, or can be forced to deal with zoning issues, disputes, employment problems, etc. There's no way to avoid legal matters, and with legal services insurance, you don't have to pay out of pocket to get the legal advice you need quickly and easily.
Many businesses never get their day in court or receive the compensation they're rightfully entitled to simply because they can't afford to pay tens or hundreds of thousands, or even millions, for legal services. If you've never been sued or initiated a lawsuit against another party, you may need to be made aware of how much they can cost. Even the cost of litigation for a short, one-day trial is likely to exceed $10,000, and that's just a bare minimum. For more extensive matters with a drawn-out litigation process, it's certainly common for litigation costs to exceed a million dollars and keep climbing from there. Most businesses can't absorb those types of costs without closing down or suffering huge financial setbacks. Legal services insurance can give you the support you need to ensure that you can deal with litigation expenses and get back to business without financial strain.
Legal services coverage is an unusual form of insurance because it allows you to access unlimited legal advice on various legal issues and topics without filing an insurance claim. As we all know, every time you file an insurance claim, it is recorded on your claims history and can impact your future coverage by increasing your insurance premiums. In some cases, you may not even be able to get some type of coverage if you have multiple claims on your insurance history.
As a result, business owners are often reluctant to file a claim even when necessary—and most people are entirely unwilling even to consider doing so for a relatively small matter like needing some information on the best way to go about incorporation for their business, or about how to avoid a potential breach of contract. When you have legal services insurance, you can make a phone call whenever you need to and speak with a qualified attorney who can give you the direction you need. You don't have to pay per phone call or file an insurance claim to do so without hurting your ability to access a claims-free discount on your insurance premiums.
Insurance coverage, in general, is one of the best tools in your arsenal to manage risk for your business, and legal services insurance is a particularly effective way to handle risk management. Because you can quickly and easily access legitimate legal advice whenever you need to, you can get the legal assistance necessary to avoid litigious situations in the future, so you don't need to file claims on your liability coverage or legal services insurance and don't have to go through the time-consuming stress and hassle of a lawsuit. Taking care of potential problems before they even start is by far the best risk management strategy out there, and a little legal advice goes a long way toward preventing the need for lawsuits and the insurance claims that come with them.
Not exactly, though they do have some overlapping similarities. One important thing to understand about liability insurance is that there are many different kinds, and they each apply to different types of legal situations. For example, Professional Liability insurance applies to issues such as accusations of negligence, bad advice, misconduct and failure to deliver services. Commercial General Liability applies if you are accused of causing third-party bodily injury or third-party property damage. Commercial Cyber liability insurance applies to situations related to cybercrime and so on. That means there are plenty of gaps that are left uncovered by various types of liability insurance.
Legal services insurance, on the other hand, applies to most types of legal situations, whether you are being sued or you need to bring legal action against another party. It's an excellent way to ensure that you have robust coverage so you can get the legal assistance you need, regardless of whether you're the plaintiff or defendant. It's also important to remember that legal services insurance offers you access to legal advice via telephone for a massive range of questions or issues that you may need legal assistance with.
If you've been reading up on legal services insurance, you've probably come across the terms "before-the-event" (BTE) and "after-the-event" (ATE). These refer to two different types of legal services insurance in Ontario that, as the names suggest, are purchased either before or after an event that leads to litigation. Before-the-event insurance coverage is purchased before an event occurs, so it's in place and ready to go as soon as it's needed. This is, by far, the most popular type of legal services insurance. ATE insurance, on the other hand, is coverage that can be purchased after an event occurs to help the policyholder deal with the costs of the resulting litigation.
It will likely come as no surprise that BTE insurance is less costly than after-the-event insurance, and that's a big reason why it's the preferred option in most cases. Suppose you haven't already purchased legal services insurance and find yourself needing insurance support for litigation costs. In that case, ATE coverage is an excellent option to get the necessary financial compensation to recoup litigation expenses.
However, another notable reason is that before-the-event coverage is the better choice. Legal services insurance offers you access to legal advice without the need to make an insurance claim, and naturally, you have to have the coverage in place to use it. That means you can only get legal assistance with before-the-event legal services insurance. While ATE coverage is good if you're in legal hot water without comprehensive insurance coverage in place, it doesn't give you one of the biggest benefits of legal services insurance, which is to preempt litigious scenarios and manage risk by speaking to legal aid service providers without filing an insurance claim.
If you have questions about Ontario legal services insurance or would like to get started on a quote to have it added to your commercial insurance package, pick up the phone and call Morison Insurance at 1-800-463-8074. Our dedicated insurance brokers work for our clients rather than for the insurance companies, so you can trust us to make your best interests our top priority.
Your business is different from any other, meaning a one-size-fits-all insurance solution won't provide the perfect coverage for your commercial endeavours. Whether you need to know more about legal services insurance or are interested in a quote for another type of business insurance, count on our commercial insurance brokers to work tirelessly to find the right insurance coverage for you.
This content is written by our Morison Insurance team. All information posted is merely for educational and informational purposes. It is not intended as a substitute for professional advice. Should you decide to act upon any information in this article, you do so at your own risk. While the information on this website has been verified to the best of our abilities, we cannot guarantee that there are no mistakes or errors.