Legal protection insurance

Legal protection insurance is a type of UK business cover. It specifically deals with legal action. For example, offering financial support if you need to defend yourself or pursue an action. It may cover:

• Employment disputes with current or former staff 
• Contract disagreements with suppliers
• Damage to business property or trespassing
• Non-payment after selling goods or providing services
• Proceedings after a tax compliance check.

This insurance can help cover a range of legal action costs, including: 

• Solicitor and barrister fees
• Court costs
• Expert witness expenses
• Attendance expenses
• Accountant fees
• The cost or defence of an appeal.

Along with your cover, you can get free tax and legal advice.

You can’t buy Hiscox legal protection insurance on its own. Instead, you would buy it alongside any other cover type as part of a business insurance policy. This includes professional indemnity, cyber, public liability and employers’ liability insurance.

A small business may choose legal insurance as a safety net. It could offset the risks of disputes, trespassing, tax complaints or legal action. If you would struggle to pay for your own defence, legal protection insurance could help.

Say an employee pursues a claim for wrongful dismissal and takes you to tribunal, legal protection insurance could help represent you.

For a painter and decorator, tools and materials are vital. If trespassers break into your yard and damage fencing or kit, you might face high costs. This cover can help fund legal action.

Graphic designers and digital marketing start-ups may land big contracts. But what if the client doesn’t pay, months later? Legal protection insurance could support with UK civil proceedings. It may cover the costs of recovering the debt. 

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The amount of legal protection you need will depend on certain factors. For example, the:

• Size of your business
• Nature of your work
• Clients you service.

We’ll help to ensure your policy fits your needs. We’ll also give you access to free legal advice via our Business Support Hub.

DAS can cover you up to £500,000 for legal costs when defending a claim. The cover options are £100,000, £250,000 and £500,000. It could help pay for solicitors and barristers, for example.

The limit of indemnity is the maximum we could pay for all claims resulting from events that happen during the same time, or because of a shared cause.

If a contractual dispute about your commercial tenancy leaves you with a legal bill, solicitor and accountant fees, and court costs, your cover limit should be at least as high as the sum of these. It may also be useful to think about worst-case scenario costs when setting cover limits.

Our legal protection insurance, underwritten by DAS, can cover certain legal costs. They may include:

• Compensation for an employee – past, present or future. This applies if they take action via an employment tribunal
• Negotiation of legal rights involving contractual disputes, over the purchase, hire, sale or provision of goods and services
• Legal action to recover a debt for goods and services exceeding £250
• Negotiations on your behalf, and representation for appeal proceedings, involving Income or Corporation Tax compliance checks
• Legal defence costs for non-motor criminal prosecutions, or civil action for breaching certain legislation
• Legal proceedings involving the bodily injury of employees.

Here are some things legal protection insurance won’t cover:

• Costs incurred before DAS have agreed to accept the claim
• Claims reported to DAS more than 180 days after the date the insured person should have known about the incident
• Claims arising from tax avoidance schemes
• Claims relating to patents, copyrights, trademarks and merchandise marks. Plus, registered designs, intellectual property, secrecy and confidentiality agreements
• Incidents deliberately or intentionally caused by an insured person
• Compensation claims for personal injury, or damage to property in employment dispute
• Failure to comply with minimum wage laws
• Claims relating to any illness or bodily injury which develops gradually. Or those not caused by a specific or sudden accident
• Amount of the excess.

Please refer to the policy documents for the full details of inclusions and exclusions of this cover. Policy documents are available when purchasing online. You can also contact our customer services team for more information.