The question in the headline gets asked all the time, as does whether people have to instruct a solicitor chosen by their insurance company.

The simple answer to both is that whilst you need funding for your claim, you don't need legal expenses cover sold to you at insurance policy renewal time, nor must you instruct an insurance-appointed solicitor.

Most people are offered legal expense insurance when they renew their motor or household policy. It's often sold as a product that covers the cost of legal fees for pursuing or defending a claim for many kinds of disputes.

A legal expenses product sold to you as an add-on to a car or household policy is called 'before the event' insurance, one taken out after an accident is 'after the event' insurance.

It should be noted that the insurance premium for a legal expenses policy taken before the event is often considerably cheaper than if taken out after the event.

How does 'before the event' insurance work?

The broker or insurer will charge you the amount for the add-on, and when you have an accident they pass their claim to one of their 'panel solicitors'.

Panel solicitors have entered into an agreement with the insurer following, in most cases, a number of quality checks, and will have agreed to pay the highest referral (introduction) fee, for your claim.

These fees now often exceed £750. To ensure transparency, you should be made aware of the referral fee paid by a solicitor to you own broker or insurer.

You may have a clause in the contract stating that your claim has to go to a panel solicitor, though this is quite rare and you normally have a choice. Your insurer obviously has a vested interest in you using one of its panel firms, so it might be quite persuasive about you using one.

You need to appoint the firm you feel will work to ensure you get the best possible outcome, and establish whether it has specialist knowledge of the area in which your claim falls? For example, motorbike accidents are very often assessed differently by a non-biker or someone who doesn't deal with these types of claims regularly. 

When you are referred to a solicitor you'll usually enter into a 'no-win-no-fee' type agreement.

If you don't have 'before the event' legal expenses insurance, your solicitor will discuss with you funding and 'after the event' insurance, the premium for which will in most cases be recoverable from the third party after successful completion of your case. 

Freedom

Essentially, you've got freedom of choice. You can't be compelled by anyone to choose one firm over another.

Our advice is simple: make sure you end up with a solicitor of your choice and funding that suits you.

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