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The recent employment trends have shifted the perception of labor for both employers and employees. Still, the fact that a solid employee benefits package is a “talent magnet” has remained true.
Yet, not all benefits are created equal, and some options are objectively better than others.
According to Willis Towers Watson, the legal insurance policy (plan) is one of the fastest-growing voluntary benefits. Hence, if an employee is focused on safeguarding against the financial burdens of legal proceedings, legal insurance plans are a great benefit to have. The question is, what kind of legal cover would one get?
The coverage offered by these policies can be quite comprehensive, ranging from initial consultation to costs associated with court proceedings. The end goal, of course, is for the policy to serve as a protective shield against potential financial losses from lawsuit settlements or rulings.
However, the coverage extent can vary significantly based on the insurer and the specific type of plan in question. And this is additionally layered by the type of legal insurance one has.
There are individual policies provided by private companies, which may have some limitations on their coverage. Or group plans extended through employers, which generally offer a more extensive array of benefits at a reduced cost.
This cost-effectiveness comes from the participation of larger pools of members.
What is Legal Insurance?
Legal insurance is a comprehensive service offering access to skilled attorneys and guaranteeing legal support and guidance. This resource empowers people to protect their rights and navigate legal complexities.
The main benefit of legal insurance is connecting policyholders with competent lawyers specializing in different areas of law. They can also rely on their appointed attorneys to assist them in preparing, reviewing, and ensuring the accuracy of various legal documents.
It saves time, effort, and money and helps people avoid costly mistakes that could arise from DIY attempts.
Depending on the policy, it can sometimes cover consultation or representation in court, which relieves the stress of navigating the legal system independently.
Furthermore, most providers often offer additional resources and benefits, such as legal advice helplines, online legal tools, and educational materials. These supplementary services empower policyholders with knowledge and insights to make informed decisions about their legal matters.
It’s not only about providing reactive support but also about proactive legal planning.
Policyholders can seek advice from attorneys to preemptively address potential legal issues and develop strategies to safeguard their interests. This approach helps avoid legal pitfalls and minimizes the risk of facing unexpected legal challenges in the future.
What is a Group Legal Plan?
Group legal insurance, also known as group legal or prepaid legal insurance, is an offering commonly included as part of a workplace benefits package. This type of insurance provides employees with the opportunity to opt into a legal plan by paying a set monthly premium or nominal yearly fee, which in return grants them access to a network of experienced attorneys.
As described above, the main benefit is utilizing a network of attorneys who have entered into a contractual agreement with the organization to provide legal services. As long as a network attorney is employed, there are no bills, deductibles, or claims forms.
Similar to health insurance, receiving legal coverage through an employer is becoming a prevalent practice. Businesses often enjoy lower premiums than individual policies by purchasing coverage for all employees under a group plan.
What’s more, group legal plans typically forgo deductibles and co-pays, streamlining the process with a straightforward monthly fee for all workers. This approach ensures that employees receive equal coverage regardless of their personal income or employment status, promoting fairness and access to legal services for everyone.
In summary, group legal insurance is a beneficial resource for employers and employees, as it offers cost-effective access to quality legal assistance without the burden of individual deductibles or co-pays.
This inclusive approach fosters a sense of security and ensures that legal support is readily available to those who opt into this.
Employees’ Access to Legal Services & Its Impact on Businesses
The impact that group legal plans have on businesses is multifaceted.
From a financial standpoint, these plans reduce costs for employers associated with litigation and other expenses of legal disputes. On an operational level, providing access to experienced attorneys helps ensure compliance with applicable state and federal laws. So, any potential violations can be taken care of quickly before they become costly problems down the line.
And most employees like having it as a benefit. In fact, Millennials (41%) are more likely to purchase legal insurance than older generations (30%), according to an ARAG-commissioned study.
Finally, offering this benefit may increase staff members’ morale and help attract new talent. Providing legal protection shows current and potential workers that the company values them enough to invest in their future mental and financial well-being.
What Does Legal Insurance Cover?
What legal insurance covers varies from plan to plan.
Each insurance company makes up its policy, but examples of what might be covered are shown below.
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What does legal insurance cover for individuals? |
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Consumer protection |
Auto repair |
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Buying or selling a car |
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Home improvement |
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Personal property disputes |
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Consumer protection for goods and services |
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Consumer fraud |
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False advertising |
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Unfair business practices |
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Personal protection |
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Debt-related matters |
Debt collection |
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Garnishments |
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Student loan debt |
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Bankruptcy |
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Family |
Name change |
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Adoption |
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Child fostering |
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Marriage |
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Prenuptial agreements |
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Separation |
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Divorce |
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Child support |
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Guardianship |
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Child custody |
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Single parent matters |
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Wills and estate planning |
Wills |
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Testaments |
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Trusts |
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Asset distribution |
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Power of attorney |
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Real estate and home ownership |
Contractor issues |
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Neighbor disputes |
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Buying a home |
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Selling a home |
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Deeds |
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Foreclosure |
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Land disputes |
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Tenants’ services |
Lease agreements |
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Security deposit |
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Landlord disputes |
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Eviction |
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Driving matters |
Traffic tickets |
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License suspension |
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Tax issues |
IRS tax audit |
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IRS tax collection |
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Tax advice |
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Criminal matters regarding minors |
Juvenile |
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Parental responsibility |
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Elderly care |
Medicare/Medicaid |
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Nursing home agreements |
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Hospital bills |
Business Legal Insurance
Nevertheless, it is not only individuals who might need legal insurance at some point. Businesses may also face situations where they can benefit from being legally protected.
According to a study by Kingston University, “The Legal Needs of Small Business,” companies report ten legal issues yearly on average.
Frequently, employers’ primary concern asks the question: does business insurance cover legal fees? While the answer is yes, coverage doesn’t apply to all claims. The following are some examples of where business insurance can be helpful.
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What does legal insurance cover for businesses? |
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Employment |
Contract disputes |
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Breach of employment laws |
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Employment restriction covenants |
Employee dispute |
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Dispute with another party |
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Tax disputes |
Tax inquiry by HMRC |
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Dispute about VAT |
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Property |
Property damage |
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Public or private nuisance or trespass |
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Recovery or repossession of property from an (ex-)employee |
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Legal defense |
An investigation that can lead to prosecution |
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Criminal proceedings |
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Compliance and regulation |
Complaint against the terms of a Statutory Notice issued against the business |
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Defense of a civil action brought against one of the employees |
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Representation during a professional or regulatory body investigation |
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Statutory license appeal |
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Loss of earnings |
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Personal injury |
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Executive suite |
HMRC’s investigation into the executive's private tax matters |
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Traffic offense resulting from personal, social, or domestic driving |
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A claim resulting from theft of personal information. |
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Disagreement that needs to be resolved through mediation |
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Contract and debt recovery |
Purchase of goods and services |
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Hire of services |
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Lease of goods and services |
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Servicing and maintenance of goods |
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Sale or provision of goods or services |
The Growing Trend of Legal Insurance
Even though legal insurance plans are growing in popularity, especially as employee benefits, they are frequently confused with discounted legal services, which are often part of employee assistance plans (EAPs).
Yet, legal issues cause as much stress as financial matters.
ARAG’s study “How Legal & Financial Stress Impacts Employee Wellness” found that there are five significant stressors among workers when it comes to legal problems:
- 71% don’t know where to seek help or how to start.
- 69% are worried about the time commitment necessary to deal with the issues.
- 68% don’t understand their options.
- 67% are concerned about the costs associated with these matters.
- 61% have trouble finding a lawyer to help.
The same study found that 90% of plan members report feeling less anxious regarding legal issues. Thus, we’re seeing that legal protection through group legal plans is fastly becoming the norm because of the advantages.
- Increased Awareness – As legal issues become more complex and prevalent, individuals and businesses become increasingly aware of the potential financial burden that legal proceedings can impose. Legal insurance is gaining traction as a proactive measure to protect against these unexpected expenses.
- Cost-Effective Protection – Legal insurance offers a cost-effective solution for individuals and businesses to access legal services without exorbitant fees. Policyholders can secure coverage for various legal matters by paying a relatively affordable premium, reducing the financial strain of hiring attorneys and navigating the legal system.
- Diverse Coverage Options – Legal insurance plans now offer a wide range of coverage options, catering to the specific needs of different demographics.
- Voluntary Employee Benefit – Many employers recognize the value of legal insurance as a voluntary benefit to attract and retain top talent. Including legal insurance in employee benefits packages demonstrates a commitment to supporting employees’ well-being and addressing their legal concerns.
- Access to Legal Services – Legal insurance aims to bridge the gap between legal representation and those who might otherwise struggle to afford it. This democratization of legal services helps ensure that people from various economic backgrounds can access justice and protect their rights.
- Simplified Legal Support – Legal insurance providers often offer helplines and online resources, enabling policyholders to obtain quick legal advice and guidance. This simplification of legal support makes it easier for individuals and businesses to navigate legal issues promptly and effectively.
- Evolving Policy Coverage – As the legal landscape evolves, so do legal insurance policies. Providers are adapting to the changing legal requirements and expanding their coverage options to meet the demands of the modern world.
- Rise of Specialized Coverage – Some legal insurance plans offer specialized coverage for niche areas, such as intellectual property, family law, or employment disputes. This enables individuals and businesses to find tailored solutions for their legal needs.
- Risk Mitigation – Good legal insurance offers a proactive approach to risk management. It helps protect against potential lawsuits and legal challenges that could disrupt business operations and lead to significant financial losses.
Conclusion
In conclusion, the growing popularity of legal insurance plans, particularly as employee benefits, highlights the increasing recognition of the significance of legal protection in today’s world. Thus, legal protection through group legal plans is rapidly becoming the norm due to its numerous advantages.
By offering a cost-effective means of accessing legal services, employees can obtain coverage for various legal matters without bearing exorbitant fees.
For employers, providing legal insurance as a voluntary benefit showcases a commitment to supporting employees’ well-being and addressing their legal concerns. Moreover, legal insurance bridges the gap between legal representation and individuals who may otherwise struggle to afford it, thereby democratizing access to justice.
Written by Violeta Bojkovska
Director of Content & SEO at Shortlister
Legal Insurance Plans
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