It pays the lawyers. Not the loss.
Legal expenses funds the cost of pursuing or defending a dispute. Employment, contract, property, tax and prosecution. It doesn’t pay the sum in dispute, the debt, or the fine.
Commercial legal expenses insurance
Usually includes
Employment disputes
Contract disputes
Debt recovery
Property disputes
Tax & VAT enquiries
Statutory & regulatory defence
Know your cover
Whether it pays is settled before you claim.
Legal expenses pays the professional costs (solicitors, counsel, court fees and experts) on disputes your business gets drawn into. It is bought as a set of sections, and it comes with two tests and one condition that decide whether it ever pays out. All three are on this page rather than in the wording.
Costs, not the claim
It pays what the fight costs. Not the sum in dispute, not the debt you’re chasing, and never a fine or a penalty.
Two tests before it funds
The matter has to have arisen after the policy started, and the insurer has to be satisfied the case has reasonable prospects (broadly, that you are more likely to win than lose).
The helpline is the condition
On most employment sections, taking the insurer’s advice before you act is a condition of cover, not a service you can ignore.
What we cover
What each cover does, and where it stops.
The cover, the conditions attached to it, and the things it typically won’t reach, set out side by side rather than three clicks apart.
Cover
What comes with it
Commonly excluded
Employment disputes
Defending claims brought by employees and former employees, including tribunal proceedings.
Usually the section that earns the premium, and on most wordings it also covers awards and settlements as well as the defence costs. It is also the section with the helpline condition attached.
Anything you did before taking the insurer’s advice, where the wording requires it. Claims arising from a matter that already existed when cover started. Redundancy payments you owe anyway.
Contract disputes
Pursuing or defending a dispute over a contract for goods, services or equipment.
Covers both sides of a commercial argument. Most wordings set a minimum amount in dispute before they will fund a case, and apply the reasonable-prospects test throughout, not just at the start.
Disputes below the minimum amount, which the insurer sets. Contracts you entered into before the policy began, on some wordings. Disputes with your own employees, which fall under the employment section.
Debt recovery
The legal cost of chasing money a customer owes you and will not pay.
Funds the solicitor’s work in pursuing the debt, and often includes the pre-action correspondence that settles most of them. Usually limited to a number of matters or a value band each year.
The debt itself. It does not pay you what you are owed if the customer turns out to have nothing, which is credit insurance, not this. Debts already overdue when cover started.
Property disputes
Arguments over your premises. The lease, the boundary, access, nuisance and dilapidations.
Covers disputes with a landlord, a tenant, a neighbour or the local authority. Dilapidations claims at the end of a lease are among the most common, and they arrive when you are least able to argue.
Anything arising from a lease you signed before cover started, on many wordings. Disputes over property you do not occupy. The cost of the repairs or the rent themselves.
Tax & VAT enquiries
Professional fees for representing you through an HMRC enquiry or investigation.
Pays your accountant or adviser to handle the enquiry, which is usually the whole cost of one. Cover normally responds to the enquiry itself rather than requiring you to have done anything wrong.
The tax, the interest and the penalties. Enquiries into returns filed before cover started. Anything arising from a deliberate failure to declare, which is not an insurable event.
Statutory & regulatory defence
Defending a prosecution. Health and safety, food, environmental, licensing, trading standards.
Funds the defence of a criminal or regulatory prosecution brought against the business, including the preparation and the advocacy. Notify the moment you receive a notice, not once a date is set.
The fine or penalty if you are convicted, which cannot be insured. Deliberate acts. Proceedings arising from something the insurer had already declined to fund.
Data protection
Defending an information-rights investigation, and civil claims brought by individuals.
Covers the legal cost of responding to a regulator’s investigation and of defending claims by people whose data you hold. It sits alongside cyber cover rather than replacing it.
Fines imposed by a regulator. The cost of investigating and fixing a breach, which is cyber cover. Anything you were already on notice about.
Legal helpline & documents
An advice line, and template contracts, policies and letters.
Included as standard on most policies and the part people forget they have. On the employment section, using it before you act is generally a condition of the cover, so the call is not optional.
It is advice, not representation. It does not run your case. Advice given on a matter the policy would not cover. Nothing here obliges the insurer to fund what follows.
Call the helpline beforeyou dismiss anyone.
On most employment sections, taking the insurer’s advice before you act is a condition of
the cover rather than a service attached to it. Dismiss first and ring afterwards, and the claim
can be declined however strong your case was.
Words you’ll see
Six terms that decide whether it funds your case.
Reasonable prospects
The test the insurer applies before it will fund anything. Broadly, whether you are more likely to win than lose. It is applied throughout, so funding can be withdrawn if the case weakens.
Appointed representative
The solicitor the insurer instructs. Before proceedings are issued you will normally use their panel; once proceedings are issued you have the right to choose your own, subject to the rates the insurer will pay.
Indemnity limit
The most the policy pays on one matter, and usually also a separate ceiling across everything in the period. The second one is the easier to overlook.
Prior matter
Anything that arose, or that you already knew was coming, before cover began. This is the most common reason a legal expenses claim is declined.
Costs and disbursements
Solicitors’ fees plus counsel, court fees and experts’ reports. This is what the policy pays. It is not the sum in dispute.
Adverse costs
The other side’s costs, which you can be ordered to pay if you lose. Covered on most wordings, and usually the larger number of the two. Worth confirming it is included.
Why Vara
Bespoke service for you & your business,
without the big-firm minimum.
01
We tell you about the condition at the start
The helpline condition on the employment section is the one that costs people their claim. You should hear about it when you buy the policy, not when you claim on it.
02
We present the risk properly
Which sections you need depends on how you employ people, who you contract with and how you hold your premises. How that is described changes what you are offered.
03
Named insurers, not a black box
We place with a published panel and tell you who’s on it. You can see where your risk went and who’s carrying it.
04
We recommend, and we write it down
We set out cover, limits and exclusions, recommend a policy from our panel, and put in writing why we consider it meets your demands and needs, so you can check it. The decision is always yours.
You talk to a person. The machines do the typing.
Alongside this policy
The three that sit next to it.
Commercial combined
Legal expenses is often a section on a policy like this one rather than a contract of its own. Worth checking before you buy it twice.
Professional indemnity
A claim that your advice or your work was wrong is professional indemnity, not legal expenses. Different policy, different trigger.
Management liability & D&O
Claims made against directors and officers personally. This policy defends the business, not the individual.
Free review of your legal expenses cover and costs.
Leave your details and we’ll call you straight back. One conversation covers the disputes you’re exposed to and the costs that come with them.
What the review covers
We go through the policy you have now, so you can see what it does and doesn’t cover against a dispute, an investigation or a claim you need to defend.
We point out the terms that catch legal expenses customers out most often, prior matters and adverse costs among them, so you can check yours.
We approach insurers on our panel who write legal expenses cover, and come back with what they’ll offer.
We explain each option in plain English, including what it doesn’t cover.
If it’s not a risk we can place, we’ll tell you straight away rather than leave you waiting.
No obligation to switch. You decide what fits.
Rather not wait? Call us on 0333 091 3663
Good to know
Legal expenses questions, answered straight.
Does it pay the money I'm claiming?
Can I use my own solicitor?
What does "reasonable prospects" actually mean?
I've already got a dispute. Can I insure it?
Does it cover fines?
Do I have to use the helpline?
Is debt recovery the same as credit insurance?
Can I buy it on its own?
Vara Commercial Insurance · 0333 091 3663
Vara is a trading name of Koral AI Operating Company Limited. Vara is an appointed representative of Innovative Risk Labs Ltd, under Firm Reference Number 1060955. Innovative Risk Labs Ltd is authorised and regulated by the Financial Conduct Authority, under FRN 609155. We are registered in England and Wales under Registered Company Number 17256222. Registered office: 167-169 Great Portland Street, 5th Floor, London, W1W 5PF.