More than just legal insurance

This article was first published on Insurance Business

More than mere protection against the most common legal risks facing businesses, legal expenses insurance has developed into a broad risk management tool that helps companies to navigate and mitigate a much wider range of threats. Anne Wienand, Head of Strategic & Corporate Partnerships at ARAG, explains how SMEs are using LEI to manage business risk.

Legal expenses insurance (LEI) has long been recognised as vital protection for smaller businesses, from start-ups all the way up to mid-sized companies, which is why legal protection can be found in so many commercial package policies.

As well as dovetailing nicely with other covers, such as liability and D&O, LEI policies can be tailored to meet the needs of schemes for specific trades and offer attractive ‘day-one’ benefits that businesses can make use of, even if they never need to make a claim.

But as well as essential cover against the ever-increasing risk of a legal dispute, LEI is more and more being seen as an important risk management tool, to help control and mitigate a broader range of threats that SMEs face.

A good example is the cover for employment disputes found at the centre of most commercial LEI policies. While the headline indemnity against the costs of defending a legal case brought by an employee is a key benefit that makes the package highly attractive to any business with staff, better LEI policies include additional benefits that help manage the risks that come along with employing people.

Sophisticated digital tools are available to policyholders, as soon as cover starts, to help them ensure that their employment policies and procedures are legally sound.

From basic steps, like making it easy to draft the terms and conditions of employment that all staff are legally required to receive, to creating vital workplace policies, these tools not only save businesses the cost of seeking professional help, they can help prevent problems from arising in the first place and put the business in the best position to defend a case, should one arise.

For specific issues or questions, legal advice helplines are available to provide guidance on any legal matter facing the business, whether it relates to a dispute that might be covered under the policy or not.

From simple queries like whether or not a particular piece of legislation applies to a specific business to complex questions around health and safety or import and export rules, the benefit of having trusted legal advice at the end of phone, is typically worth more than the premium.

While smaller businesses may have very few employees or none at all, almost every business will face headaches over tax. Whether it’s VAT, PAYE or corporation tax, the cost of getting professional advice will quickly rack up, and the cost of getting it wrong can be punitive.

Employment and tax questions are among the most common that businesses have, but the list of resources and tools available to support businesses is almost endless and stretches far beyond what many would think of as purely legal.

From agricultural tenancies to zero hours contracts, guidance is available to policyholders, online and over the phone, whatever their business and whatever question they may be facing. There is much more than meets the eye to LEI and, as a tool that can help business owners to manage the particular array of risks facing their company, it’s hard to beat.