What Is Legal Expenses Insurance?
In the United States, just about anyone may be sued for anything. Even if a suit turns out to be groundless, defending against it may cost you dearly in lawyer's fees; sometimes the costs alone give defendants a reason to settle an unjust claim. Legal expenses insurance, which covers legal expenses if you're sued, is one way to protect yourself against a potentially massive loss.
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Before Fact Or After?
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Legalexpensecover.com, a legal-insurance industry website, says the usual form of insurance is "before the fact," insurance taken out in advance in case you're ever sued, that pays for legal expenses. If you've already been served with legal papers, some insurers offer "after the fact" insurance to cover your expenses. Some policies will also cover you if you're the plaintiff in the case, for example suing over an accident or an unfair firing.
Where To Get It
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Homeowner or auto insurance policies may include some sort of legal insurance or offer it as a rider. If you need a standalone policy, shop for it the way you would any insurance: When you find a company, check with your state Department of Insurance that they meet all the state standards, and to see if there are any complaints against them; if you know someone who can give you a personal referral, so much the better. Obtain quotes from three or four companies and go over their policies in detail: A cheap policy that doesn't give you what you need will cost you money in the long run.
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Coverage
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Before you sign, make sure you know exactly what coverage you're getting. Legalexpensecover.com says almost all insurers will set a time limit on coverage: If you wait too long after the suit, you can't claim compensation. The insurance also may not cover legal expenses above a certain size, or the policy may only allow claims if you've a good chance of winning. And if you're the plaintiff and you receive an offer to settle, the insurer may not pay for further expenses if the insurer thinks it's a good offer, but you turn it down.
Employment Benefits
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Some employees make legal expense insurance available to their employees in much the same way that they offer group health insurance plan. If your employer offers this benefit, it gives you a chance to get legal insurance at a reduced rate.
Pre-Paid Legal Services
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Some forms of legal insurance may also offer to cover basic services, such as drafting wills, buying a house or answering an Internal Revenue Service (IRS) audit.
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