For some years now it has almost been the norm that when renewing motor or house contents insurance cover additional cover has been provided for legal expense insurance. At the outset it seemed like this was just an attempt on the part of insurance companies to charge a small premium top up and many policyholders did not even realise that they had the benefit of this cover.
However, in recent years, particularly with the scaling back of Legal Aid, increase in the small claims limit and increased court and Tribunal costs, ever more people are funding disputes through the courts and Employment Tribunals using their legal expense cover. One ongoing argument has been whether the insurance company has the right to choose which lawyer should deal with the claim. Often the policyholder wants to use their usual and locally based solicitor who they know and who is easily accessible.
The Insurers often prefer their panel solicitors, who have negotiated significantly reduced hourly rates in exchange for a guaranteed workload, but who can often be located many miles from the policyholder. Slow but sure policyholders appear to be winning this argument. They are able to rely on help from Europe and in particular Article 4(1) of Council Directive 87/344/EEC which dates back to June 1987 and records the insured’s right to choose his or her own lawyer under a legal expense insurance policy. In a recent decision the European Court of Justice has further strengthened this right by deciding that Article 4(1) does not allow the Insurer to block the appointment of the Insured’s preferred lawyer even if it would otherwise be the Insurer’s intention to deal with the matter in-house rather than by instructing an external solicitor.
The major question mark remains whether this right on behalf of the Insured to demand the instruction of his or her own solicitor commences from the outset or only when proceedings are being issued. It is still the case that many Insurers insist that they initially deal with matters in-house only giving the Insured the right to nominate when proceedings are commenced. Hopefully in the not too distant future the ECJ will further decide this issue in favour of the Insured.
In the meantime, don’t be persuaded by your Insurer that you cannot nominate your own solicitor to deal with a matter under your policy if you want to do so.
