Proactive business owners will come across difficult legal situations, knowingly or unknowingly. No one expects to be in a position where they need to hire a world-class criminal defense lawyer or a qualified divorce lawyer. On the contrary, most people will incur legal expenses like disputing traffic tickets, writing a will, or signing a contract for purchasing appliances on a lease. In some of these cases, like traffic accidents, you may already have motor vehicle insurance to cover your expenses.
You might not have specific insurance required to handle the state of affairs every time. Some examples of these situations are dealing with unfair landlords, misleading home builders, or filing for bankruptcy. These events affect our spending habits because they are unpredictable possible expenses that are unavoidable. Now, anyone can get lawsuit insurance to help get out of a sticky legal situation.
What Is Lawsuit Insurance?
Lawsuit insurance covers unanticipated legal expenses such as court fees, lawyer fees, and other interconnected costs. Lawsuit insurance has many different labels, and all these names refer to the same insurance product:
- Group legal services insurance (employer-designed plans)
- Legal expenses insurance
- Legal plan
- Legal protection insurance
- Litigation cost protection
- Personal legal insurance
- Prepaid legal plans
Lawsuit insurance is different from liability insurance prepared for business owners, property owners, and vehicle owners. Liability insurance coverage only applies if you are responsible for personal or property damages resulting in medical expenses or corrective costs. Lawsuit insurance underwriters compose policies to cover all legal expenditures for the policyholder.
How Does Lawsuit Insurance Work?
How lawsuit insurance works depends on insurance providers and their policies. You can get lawsuit insurance from law firms or legal organizations that offer customized, prepaid legal plans. Organizations can agree to pay annual or semi-annual premiums for lawsuit insurance. Some employers, semi-government organizations, and government institutions supply their employees or members with a group lawsuit insurance package.
Employees and members part of a group lawsuit insurance package must agree to the terms and conditions set by their employer or organization. Employers, semi-governmental organizations, and governmental institutions provide information to their employees and members of the premium payment schedule and benefits of the lawsuit insurance policy.
What Does Lawsuit Insurance Cover?
Be familiar with the terms and conditions of the lawsuit insurance policy before buying it because it dictates the exact terms and benefits of the policy. Lawsuit insurance plans commonly cover legal expenses such as legal assistance, legal counsel, drafting legal documents, or legal representation. Some of the issues they cover include:
- Child custody or child support
- Debt collection or refinancing
- Employment contracts
- Employment disputes
- Estate planning
- Financial contracts
- Home purchases
- Home-related building contractor controversies
- Legal agreements
- Marriage and divorce
- Tax council
- Tenancy-related contractor disputes
- Tenants’ rights
- Traffic violations
- Wills and trusts
You will not be covered for employer disputes if you have a group-administered lawsuit insurance policy from your employer. Some lawsuit insurance contracts include add-ons to the principal agreement. For example, family policies can incorporate an add-on for adoption or divorce, but not traffic violations. You will not get coverage for any provision not already mentioned in the policy before it happens.