Depending on the national rules, legal protection insurers can also represent the policyholder out-of-court or even in-court.
[1] The concept originated in 1911 when members of the 'Automobile Club de l’Ouest' were offered several additional services among which protection in case of fines or for disputes in front of police courts.
increased membership contributions to create a similar pool to pay for the defence of its members charged with traffic related offences.
Sometimes legal protection insurance is offered as a benefit to members of a trade union or association.
Therefore, the main scope of third party liability insurance is to protect others from the consequences of the policyholder’s wrong-doing.
The liability insurer, however, does not assist the policyholder to seek justice as a plaintiff in case he suffered a damage.
Different forms of legal protection insurance exist and have developed depending on the national jurisdictions.
However, in some countries (e.g. Australia, Canada, and the UK), it is also possible to obtain cover after a legal dispute has been initiated which is described as After-the-event insurance (ATE).
This insurance covers an already existing dispute where, however, proceedings have not yet started or significant legal costs or disbursements have not been incurred.
This type of cover is usually only available for disputes having high prospects of success where the insurer is likely to be able to recover his costs from the adverse party.
According to a survey commissioned by RIAD and conducted by Ipsos in August 2017 in Germany, France, Ireland, and the Netherlands, over a quarter of respondents had had a legal dispute in the previous five years.
The replies showed that in all four countries people are mainly concerned about the costs of a dispute, this is particularly true in Ireland (50% of respondents) where fees for lawyers are extremely high.
In comparison to the other countries, Dutch citizens are particularly wary of wasting time and energy (33%) while Germans tend to be concerned about being deprived of their rights (27% compared to 18% in Ireland and only 10% and 8% in France and the Netherlands).
The Canadian market has been growing rapidly and several companies (some native, some US-based) offer legal protection insurance.
In 2016 legal protection insurance gross written premium was around 56 million Canadian dollars; compared to the previous year almost double.
In the United Kingdom, legal protection insurance is primarily marketed directly to the end user without an intermediary.
In its report of November 2017, The Law and Practicalities of Before-The-Event (BTE) Insurance – An Information Study,[15] the UK Civil Justice Council concludes that legal protection insurance offers many people access to significant legal assistance.
To this end, LPI's legal helplines are filling a real gap in the marketplace and in this regard insurers considerably improve access to justice in the current landscape.
The report also sees a general lack of awareness among consumers about the existence of a legal protection cover as such as well as about the scope of the coverage.
Legal plans rely mainly on bulk savings (for instance mass purchasing of legal services or in-house counsel for a specified group of people, such as trade union members) rather than on insurance principles, i.e. they do not include guarantees like insurance but provide cover only until the accumulated funds are used up.