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Key questions to ask providers about legal expense insurance

DAS Legal Protection Inc. - Dominique Zipper
DAS Legal Protection Inc. - Joanna Milnes

When considering legal expense insurance, there are a handful of questions law firms should be asking insurance providers, say Dominique Zipper and Joanna Milnes, both with legal expense insurance company DAS.

Zipper, the Director of After-the-Event (ATE) insurance with DAS, says legal expense insurance is new to the Canadian market, so it’s important that lawyers fully understand the products being offered through different providers.

ATE insurance is a policy that fully protects a client against their opponent’s adverse costs and their own disbursements, should the case fail or be abandoned.

Milnes, ATE Business Development Specialist with DAS, says one of the first questions to ask is how long the insurer has been providing legal expense insurance.

“This is an important question to ask because legal expense insurance is very different from the standard property and casualty insurance in that the premium is contingent and deferred,” she says. “It's contingent on the case being successful, and it's deferred to the end of the action.”

DAS, the first company of its kind to enter the Canadian market, has been offering legal expense insurance in Canada since 2012 but has been providing it in the United Kingdom since 2000.

“Some competitors in the market are much newer to the experience of writing ATE insurance whereas we can rely on the experience and expertise of other members of the DAS group,” Zipper says.

That experience and breadth of claims data also helps DAS accurately underwrite and determine the pricing for these products, Milnes notes.

Another important question is to ask the provider about the composition of the company, says Zipper.

“Joanna and I are both lawyers and we practised personal injury law, so we have the ability to not only speak to lawyers in their language, but we can also get into the nuances of what's happening in a case and answer quite difficult questions about certain contingencies,” she says.

Zipper notes DAS has other lawyers on staff who are instrumental in crafting policies so that they work in the Canadian legal landscape.

“Ask whether there are lawyers on staff at the insurance company that's offering a product because it will go to whether the policy was created to function properly in Canadian litigation,” she says.

Milnes says law firms should also inquire about what types of cases the insurance company covers.

“There is value in working with one insurer and insuring the breadth of your portfolio,” she says. “You get to know the requirements and develop a relationship, which is valuable.”

Conversely, if you have to get coverage from a variety of different insurers, then you have to keep up with all of the different requirements, which can lead to more headaches for the law firm.

“We cover a variety of case types within personal injury — motor vehicle accidents, slip and falls, occupiers’ liability, product liability, assault and abuse cases,” Milnes says. “If you're a personal injury firm, then pretty much all of your cases can be insured with DAS.”

Law firms would be wise to also ask who is the named policyholder, says Zipper.

“You need to figure out whether it’s the law firm or the firm’s client,” she notes. “At DAS, the firm's clients are the policyholders which is an important distinction. When it comes time to pay any claims money, we pay it to the plaintiff.”

Other insurance companies may have the law firm as the policyholder, which is risky from an access-to-justice perspective, Zipper says.

“If the law firm decides tomorrow they no longer want this insurance policy then they can terminate coverage, leaving their clients uninsured,” she says. “If the client is the policyholder, the policy is mobile. It’s there to protect the person who is at risk of paying adverse costs.”

Milnes says law firms should ask whether the product is mandatory for all of their files. Insurance companies have different requirements, but the product is not mandatory with DAS.

“We ask firms to explain legal expense insurance to all of their clients, and generally, once plaintiffs understand the benefits and risks, they are more likely to want to be insured — but it is not mandatory,” she says.

Ask the insurer what the different insured scenarios are, Milnes says.

“Again, this will vary across companies, but you want to be clear on which situations are covered,” she says. “DAS covers an extensive list, but the main scenarios are failure to beat a defendant's last formal offer, abandonment, as well as withdrawals and trial losses.”

A final consideration is how many products the insurer has available, Zipper says.

“Some insurers only have a one-size-fits-all product,” she says. “We recognized when we reviewed our products that what works for one firm with one type of client isn't going to work for another, so we have six options.

“Make sure when you're checking out different insurers that you are getting what would work for your clients, as opposed to just getting what that insurer happens to offer,” Zipper adds.

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