By Legal Futures Associate Allianz
They may be mighty but being a small business isn’t easy. For all the opportunities, there’s unfortunately always challenges. For example, legal disputes can be a major drain on resources, both in terms of time and money.
However, legal expenses insurance can provide protection against legal claims and access to legal advice, making it a valuable tool for those looking to protect themselves and their assets.
Around one-third (32%) of small businesses experience is a legal issue annually.
What is legal expenses insurance?
Legal expenses insurance covers the costs of legal fees and expenses incurred by a business or individual. This type of insurance can be tailored to suit the specific needs of a small business, covering everything from employment disputes and contract issues to property damage claims and personal injury cases. By purchasing legal expenses insurance, small businesses can focus on operating, knowing that they’re protected against a wide range of legal claims.
How it can help
One of the key benefits is access to legal advice. Many policies offer a legal helpline that small business owners can use to get advice on a variety of legal issues to help make informed decisions and avoid potential legal pitfalls. This can be especially valuable for companies that don’t have an in-house legal team or the resources to hire outside legal counsel.
Only a quarter of small businesses used professional help in response to legal issues, while around half either sought to resolve their legal issues entirely on their own or took no action at all.
Legal expenses insurance can also provide small businesses with financial protection in the event of a legal dispute. If sued for breach of contract, the policy will cover the costs of defending the case. This can include legal fees, court costs, and other associated expenses. Without it, small businesses may be forced to pay these costs out of their pocket, which can be a significant financial burden.
It’s been previously found that SMEs are losing more than £13.6bn a year by failing to take care of legal issues, with disputes costing £1.7bn and issues surrounding employees and contractors coming up to £1.6bn.
It can also help avoid legal disputes altogether. Online legal information hubs can help ensure that contracts, employment policies, and other legal documents are in order, reducing the likelihood of a dispute. This will again save time and money in the long run, as well as protect reputation and assets.
What to consider?
Small businesses should carefully consider their legal expenses insurance options and choose a policy that meets their specific needs. This may include coverage for specific types of legal disputes, such as employment disputes or property damage claims, as well as a legal helpline that is available 24/7. It’s important to be aware of any exclusions or limitations in the policy, such as a cap on the amount of legal fees that will be covered.
A valuable tool
Overall, legal expenses insurance can be a valuable tool for small businesses looking to protect themselves against legal claims and access legal advice. By providing financial protection and access to legal expertise, it can help navigate the complex legal and business landscape.