Fight for justice... using your home cover
Many workers are unaware that their insurance may pay tribunal fees
WORKERS reluctant to take action against employers over discrimination or unfair dismissal because of unaffordable legal costs could unwittingly be sitting on insurance designed to meet these bills.
Fewer people are taking claims to employment tribunals since fees of up to £1,200 were introduced in 2013. Sex discrimination claims have fallen by 71 per cent, race cases by 58 per cent and disability claims by 54 per cent. Unfair dismissal cases have plummeted by 73 per cent.
Concerned by the drop in claims, the Government announced last month it is considering extending the help available to those on low incomes.
But help with pursuing claims – for free – is often available through legal expenses insurance, which millions of householders have as part of their home policy.
One recent high-profile case where legal expenses cover was used was when Lucy Ward won a tribunal against her former employer, Leeds United football club.
Ward, a former Leeds academy education and welfare officer, won her claim for unfair dismissal and sex discrimination in April last year.
FORGOTTEN POLICIES
MANY people forget or are oblivious to the fact that they have legal expenses cover.
James Henderson, managing director of provider DAS UK Group, says: ‘Often policies are bundled into home cover or packaged bank accounts and people do not know they have the insurance.’
Research by comparison website Gocompare found that one in five home policies include legal expenses cover as standard. But in most cases it is sold as an optional extra.
Cover is sometimes included in packaged bank accounts and it can also be bought as standalone insurance.
The additional premium for adding legal expenses to home cover ranges from £3 to £45 a year, while a standalone plan costs between £15 and £30.
Specialist providers include DAS, ARAG, ARC and Legal Insurance Management.
Buyers need to be aware that these policies have limitations. They will fund the cost of legal advice or court bills up to certain limits, but will not pay any damages a policyholder might be trying to claim. These sums must be settled by the losing side if the judge decides in the policyholder’s favour.
No two policies are the same, so it is vital to scrutinise terms and word- ing. Adam Powell, head of operations at insurance broker Policy Expert, says: ‘Your level of cover can vary significantly. Some plans will cover every eventuality, but others will not be so extensive. If you have taken out legal cover for a certain precaution, make sure you have checked the small print to ensure you are covered.’
WHAT POLICIES EMBRACE
ALL providers give access to free legal advice helplines, while some offer other counselling services.
Most will cover contract disputes, bodily injury, employment claims (including tribunals) and property issues such as party wall disputes or nuisance neighbours. The most comprehensive plans will also cover disputes with the taxman, criminal negligence and identity theft, and will even pay out compensation if work is missed because of jury service.
Gocompare says cover limits usually range between £25,000 and £100,000. Crucially, for anyone wanting to use the cover for an employment claim, the lower limit of £25,000 often applies.
Henderson expects the policies to be appreciated more in coming years as the reduced access to justice takes hold and the working world changes. He says: ‘Younger people are likely to change employers up to eight times in their career, which creates more opportunity for conflict.
‘There will also be issues with zero hour contracts and disputes with companies such as Uber, where drivers recently brought a legal case to say they were employees and not self-employed.’
THE CATCHES EXCLUDED ACTIONS
LEGAL expenses cover is usually limited to the cost of civil rather than criminal disputes. Divorce bills will also not be met, though valuable legal advice might be available for free for warring couples via an insurer’s helpline.
WEAK CASES
HAVING cover does not guarantee that a case will be taken on. The insurer’s lawyers decide whether you have a fighting chance and will only proceed with those that they deem have at least a 50 per cent chance of success.
DAS UK’s Henderson says: ‘The pricing of these policies reflects this process. If the acceptance rates were higher, we would inevitably be dealing with spurious claims and premiums would have to rise to reflect this.’
Last year, one in five of DAS’s claims were turned down for failing the ‘reasonable prospects of success’ test.
Of those that went ahead, 90 per cent of policyholders won their case or reached a settlement.
LACK OF CHOICE
INSURERS use their own panel of solicitors. You can opt out and appoint your own, but the policy will only finance the same hourly rate negotiated with the insurer’s panel, which realistically will be far lower than individuals could agree.
HELP ELSEWHERE
POLICY premiums may be a waste of time for those who have access to free help elsewhere.
Policy Expert’s Powell says: ‘There are instances where you might already be covered legally by another body. A union may cover an employment dispute on your behalf or your bank may already cover you for an identity theft dispute. But if you do think there is a cross-over, always consider the level of cover offered.’
UNHAPPY CUSTOMERS
NOT ALL policyholders are satisfied with their cover. The Financial Ombudsman Service, which steps in to help resolve disputes between insurers and customers, received 705 complaints about these plans last year, with one in three upheld in favour of the policyholder.
Gripes tend to centre on an insurer’s refusal of a case, disagreements over the choice of solicitor and arguments over how a claim has been handled.
In the past couple of years the industry has cleaned up its act after a crackdown on the aggressive selling of such add-on policies by certain providers and comparison websites.