Thursday, 20 February 2014

Is everyone who pays for motor legal expenses insurance being ripped off?

Each year UK motor insurers receive hundreds of millions of pounds in premiums from customers for Motor Legal Expenses Insurance/ Motor Legal Protection Insurance.

The "policies" cost them less than 50p each to obtain, yet they sell them on for often in excess of £30.00. Now, £30 may not sound like much, but if you are a large insurer with say 1 million policyholders all taking out legal cover, that's £30m of premium income for £500k of cost. Not a bad day at the office eh?!

In principle, there's nothing wrong with making a profit if you are selling a useful product or one that actually does what it purports to do, but here is where it goes wrong.

In the vast majority of cases, these "policies" are just a piece of paper that promises a lot, yet delivers little. The man in the street simply does not understand how this cover works and wrongly assumes that the legal expenses policy they bought will save the day if they have a collision and need a lawyer to fight their case, regardless of who was at fault. Some people even mistakenly believe the cover protects them if somebody takes court action against them, it does not.

What a motor legal expenses policy does is cover your legal costs when you need to take action against another individual when you have incurred financial loss and possibly injury caused by an event that can be blamed on another person. OK so far?

The tragedy is that the actual "policy" seldom, if ever, actually gets claimed against or pays out any legal fees. The reason being that they all contain a clause which states your claim must stand "reasonable prospects of success" before they will agree to fund your legal fees pursuing a claim. There is nothing wrong with such a principle, but the "reasonable prospects" argument is also what gives these insures a get out of jail card to avoid paying any legal costs out. How does that work?

Put simply, if you have a collision with somebody and you are at fault, well you are not going to have any reasonable prospects of succeeding against them and there is no way the legal expenses insurer will agree to pay lawyers fees for a case that has no prospects or merit. Which is fair enough. But, where it does get fishy is with the claims that have prospects of success. In such cases, if you have a successful claim, the insurer of the person who you are claiming against will end up paying your legal costs, so the legal expenses policy never ends up paying our any costs. This is why they only cost the insurer 50p in the first place, because they policies never get claimed against! But you got charged over £30 for this "policy"

Put simply, they are a claims capture mechanism in order to refer policyholders with injury claims and vehicle hire needs onto lawyers and hire companies. Why? Well because the hire companies and lawyers will have a commercial arrangement to pay commissions back to the legal expense provider for referring the customer to them.

So for all these years you have been paying the extra £30+ with your insurance costs for "legal cover" you have frankly been ripped off.

With Free Motor Legal you join as a member free of charge. We do not sell or even give you a policy of legal expenses insurance because frankly, you do not need one. You only need to register once via our website or facebook page  and then there is no need to renew annually as membership lasts for life. It matters not how many vehicles you own or insure, you only need to join once.

How can we provide this free and why is it not necessary to have a legal expenses policy? - We operate by the same criteria as the legal expenses insurers, i.e. you must still have a reasonable prospect of success for your claim. If you have prospects, then we will recommend one of our panel solicitors to act for you. They will act for you under a no win- no fee arrangement. There will be no deduction from any of your compensation awarded. Even if you just have a small amount of out of pocket expenses to claim for, our lawyers will still act for you.

Under changes to the law in April 2013, it is now the case that even if you take another party to court and lose your case, you will not be asked to pay their legal costs, unless your case is found to be fraudulent or you have failed to beat a reasonable offer of settlement made by the other party. This is called "qualified one-way costs shifting" - another reason why buying a legal expenses policy is now an outdated concept.

By being a member of Free Motor Legal, we can even avoid you incurring losses by avoiding the need for you to go through your own insurance and pay an excess after a non-fault accident. We can do this if you phone our claims reporting line before you phone your own motor insurers. If the incident is a non-fault matter and the fault party is identified, we can arrange for our partner hire company to manage your vehicle claim and arrange for inspection and repair of your damaged vehicle, whilst supplying you with an appropriate style of vehicle until your own vehicle is repaired.

The days of paying for "legal cover" really are over. People need to realise that the insurance industry has just been happy to take their money for many years for a product that is not actually necessary. Free Motor Legal are committed to helping motorists drive down the cost of insuring their vehicles whilst providing a better level of service without any charge.

We do make our money from the commissions our service providers pay us, but we have not charged you £30 a year to provide you with an outdated and unnecessary insurance product.

Register today for free and avoid ever having to pay for "legal cover" again.