Do I Need Legal Insurance?

There normally is not a sure way to know in advance whether or not you will benefit from legal insurance. In fact, the opposite normally applies. By the time you realize that you need an insurance, it is normally too late. Events which occur before you get insurance – and any later hazards which result from them – are generally excluded from cover. Additionally, there is normally a qualification period of several months from the time you get legal insurance during which coverage does not yet apply.

Whether or not you need legal insurance depends on your specific situation. Here, online comparison portal moneyland.ch lists scenarios in which getting legal insurance is worth considering:

• You spend a lot of time in traffic

If you use your car to commute to work or do a lot of driving for any other reason, getting motor legal insurance can pay off. The more you drive, the higher the chance of your getting involved in a dispute which ends in court or requires legal assistance is.

The same holds true if you spend a lot of time in traffic as a cyclist or pedestrian – although the risk of legal disputes for pedestrians is relatively low. If you only mingle with traffic occasionally, the chances of your getting into traffic disputes is lower.

• You and your employer do not see eye to eye

If you worry that your employer may breech the terms of your employment agreement – such as firing you without sticking to the contractual agreement or lowering your salary – employment legal insurance could give you more peace of mind. Legal insurance generally also covers you if a letter of reference is incorrect and you want to dispute it.

But it is worth noting that in Switzerland, a simplified legal process applies to employment cases with an amount in dispute of 30,000 francs or less. You are not charged legal fees for these cases, and you do not necessarily need a lawyer. Unless your employment situation has potential to create more expensive disputes or you expect to appeal cases to higher courts, employment legal insurance may not add much value.

• Your landlord is hard to trust

Getting legal insurance with renters’ support can make sense if you are concerned that your landlord may not respect your rights. For example, legal insurance could help you dispute rent increases or claim rent reductions. Just be aware that if you want to claim rent reductions because of some issue with the property itself, your insurer may refuse to cover legal costs if the issues existed before you got the insurance.

Much like with employment cases, arbitration of rental law procedures is also free of charge. However, if you cannot come to an agreement, the arbitration case will end up in court, and the court case will cost money. Arbitration is often enough, and you do not need a lawyer for these cases. Here too, legal insurance will not benefit you much because you do not have to pay arbitration fees.

• You love grand designs

If you own a home and employ companies to do work on your house or apartment, legal insurance which covers property law can insure the cost of legal disputes with contractors. If, for example, work is not done to pre-agreed specifications or you are overbilled, you be left with no choice but the legal route.

• You anticipate inheritance drama

If you expect a lot of quarrelling around an upcoming inheritance – because your family or relatives do not get along, for example – getting legal insurance for inheritance law can be a smart move. This covers your legal costs if the case ends up in court. However, only a handful of legal insurance offers include coverage for inheritance law.

• You need legal consultation

If you generally feel insecure with regards to your legal rights and appreciate getting help from experts, getting legal insurance could be worth it. The same applies if you tend to get nervous every time you get a letter which mentions legal action (from your landlord, for example). Most legal insurance providers give their customers access to complimentary legal consultation. You can call in and get legal consultation even when you are not involved in a legal case. If you were to get the same consultation from a lawyer, the lawyer’s fee would likely cost more than the annual premium you pay for legal insurance. Legal insurance providers also provide help in situations which do not necessarily require a lawyer.

Note that using the complimentary legal hotline generates costs for your insurance provider. If you abuse the service by getting consultation too frequently, your insurer may suspend your legal insurance policy.

Check the fine print of legal insurance offers

If you are thinking about getting legal insurance, you should make sure that the terms and conditions of the insurance actually match your specific needs. For example, if you get legal insurance to protect your wallet from the cost of disputes with contractors, you should pay careful attention to the sum in dispute. If contracts are generally worth more than the maximum sum in dispute state in your policy, there is a high chance that the insurance will only cover part of the costs of legal action. The minimum sum in dispute is also important, as the insurance will only cover cases worth at least that amount (see: franchise deductible).

The most important factor is whether or not the legal situations which you are likely to encounter are covered by the insurance, without exclusions. Do not shy away from asking the insurance company directly about whether your specific needs are covered before you buy.

You can find an overview of individual offers in the legal insurance comparison on moneyland.ch.

Better positioned

Having legal insurance puts you in a better position to access your rights when that becomes necessary. Another advantage is that legal expenses are billed directly to the insurance company using direct claim settlement. You do not have to pay costs in advance and then claim refunds. Without insurance, you have to carry all the costs yourself throughout the case, and you can only claim compensation at the end if you win the case.

When is getting legal insurance pointless?

If you only earn the minimum income considered necessary to live on and do not have any assets, then getting legal insurance is pointless. The reason is that if you cannot afford the costs of a case which you have a chance of winning, the Swiss civil code governing civil procedures entitles you to free legal care. Payment advances, deposits, court charges and lawyer fees are all covered by the government, in this case. In other words: If you cannot really afford legal insurance, you probably do not need it.

Also consider that some situations may already be covered by a different insurance. For example, personal liability insurance normally comes with some legal protection, like determining the validity of liability claims.

More on this topic:
Compare Swiss legal insurance offers now
What is not covered by legal insurance?
Choice of lawyers in legal insurance explained