Legal Expense Insurance

What Does Legal Expense Insurance Mean?

Legal expense insurance is a type of coverage purchased to cover costs associated with various types of legal action.

This insurance is commonly acquired by businesses or individuals who anticipate a high likelihood of being sued. Companies in higher-risk industries often pair it with professional liability insurance, which covers defense costs when a client sues over the work the business performed. Without legal expense insurance, parties may be forced to pay for attorney fees and other legal costs out of pocket.

Insuranceopedia Explains Legal Expense Insurance

Lawyer fees can be extremely expensive, with attorneys typically charging between $100 and $500 per hour. If an attorney needs to spend many hours preparing for a trial, these costs can accumulate rapidly.

For many people, hiring an attorney is unaffordable without legal expense insurance. However, with this insurance, individuals and businesses can cover their legal fees if they are sued or need to file a lawsuit, making legal representation more accessible. A standard general liability insurance policy already includes some defense costs, though those payments are capped at the policy limit.