Getting entangled in an expensive lawsuit or other legal process is a universal worry. Swiss tend to be less trigger happy with regards to filing lawsuits than citizens of some other countries, but when legal cases are put in motion, the costs of consultation and proceedings can be frightening.
In Switzerland, the person filing a lawsuit is required to advance the costs of legal proceedings. Only if the court rules in their favor does their counterparty become liable to reimburse the costs of the lawsuit. This leads many victims to forgo taking legal action for fear of the potentially high costs of litigation. Personal legal insurance provides some protection against the financial impact of legal action and empowers victims to take legal action without fear of financial loss.
But legal insurance coverage is by no means comprehensive, and the coverage, terms and conditions you get vary between insurance policies. Before you sign up for legal insurance, it is important that you understand what you are getting and whether it covers your legal needs.
What costs are covered by personal legal insurance?
Typically, personal legal protection insurance covers lawyer’s fees, court fees, reimbursement of counterparty expenses (when you lose), mediation costs, reports from experts and the costs of issuing orders of summary punishment.
You can filter and sort Swiss legal insurance policies based on the coverage they provide using the tools provided in the moneyland.ch legal protection insurance comparison.
Note that some insurance policies have deductibles and some also only cover legal bills when they exceed a minimum amount (300 Swiss francs or even 2000 Swiss francs, for example). Policies also generally have a cap on the sum insured.
Some policies only cover legal expenses incurred in Switzerland, while others cover legal expenses internationally.
What situations are covered by personal legal protection insurance?
The exact coverage you get varies between insurance providers, but there are certain expenses which are generally covered by most legal insurance policies. These basic coverages include:
1. Employment disputes. If your employer breaches the terms and conditions of your employment contract, legal insurance will cover the cost of legal proceedings (including the administrative costs charged by a court of law and the cost of legal representation) involved in your asserting your rights. Important: In Switzerland, no court fees are charged for employment disputes when the disputed amount is less than or equal to 30,000 Swiss francs.
2. Debt disputes. If somebody owes you money and does not stick to the terms and conditions set out in the loan agreement, personal legal insurance will normally cover the costs of asserting your rights as a lender – as per the loan agreement. If you owe money to a lender who does not stick to the terms and conditions of your loan agreement, legal insurance will normally cover the cost of legal proceedings involved in asserting your rights as a borrower.
3. Purchase disputes. If you pay for goods which are not delivered to your satisfaction in keeping with your purchase agreement, personal legal insurance will normally cover the legal expenses involved with settling the dispute. Important: Some legal insurance policies only cover legal expenses which exceed a certain threshold – typically several hundred francs – making them unsuitable for low-value purchase disputes. Purchases from merchants based outside of Switzerland may not be covered by all insurance policies.
4. Travel booking disputes. When you book full-service travel packages and the travel service provider does not keep to the terms and conditions stipulated in your travel booking agreement, the costs of settling the dispute in court are normally covered by personal legal insurance.
5. Service delivery disputes. When a service provider fails to deliver services in keeping with the terms and conditions of your contract, legal expenses insurance covers the costs of settling the dispute in court. This coverage extends to simple disputes with insurance providers (with the general exception of your legal insurance provider).
6. Property rental disputes. Disputes related to property rental contracts are typically covered by personal legal insurance.
7. Criminal law. If somebody presses charges against you, your personal legal insurance will pay the costs of your legal defense. When you press charges against another person or entity with the goal of claiming financial compensation, your legal insurance policy will normally cover the costs of the lawsuit.
What supplementary coverage is available?
In addition to the basic coverages listed above, many legal insurance policies cover additional legal expenses, either in full or in part. This additional legal insurance may cover the costs of legal cases involving personal property rights (use of your picture without your consent, for example), internet rights, neighbor law and patient rights (lawsuits against healthcare establishments). A handful of policies provide some coverage for cases related to marital law, inheritance law, real estate law and public construction law. Some policies cover the costs of general legal consultation even when no dispute is involved.
Coverage may be capped on a benefit-specific basis. For example, policies which cover general legal consultation typically cap the sum insured at 500 francs per year. Annual benefits for neighbor law, family law and inheritance law are typically limited to a low sum insured (several hundred to several thousand francs) which may only cover lawyer’s fees and not court fees or other expenses.
What legal expenses are not covered by personal legal insurance?
1. Traffic-related legal action. Legal expenses resulting from traffic accidents, car leasing agreements and other incidents related to automobiles are not covered by personal legal insurance in most cases. These expenses can be covered by motorist legal insurance. Just select “Motor legal protection only” to compare motorist legal insurance using the moneyland.ch legal insurance comparison. Select “Personal and motor legal protection” to compare policies which bundle both motorist and personal legal insurance.
2. Criminal cases when you deliberately commit a crime. If you deliberately commit a crime, legal insurance will not normally cover the costs of your legal defense until you are proven innocent.
3. Finance. Disputes related to asset management, banking and investment are generally excluded from legal insurance coverage.
4. Self-employment. Charges or legal disputes related to your occupation as a self-employed individual are not normally covered by personal legal insurance. You may be able to add this coverage as a rider on some policies.
5. Disputes with tenants. Although legal disputes by tenants against landlords are normally covered, personal legal insurance does not usually cover legal disputes by landlords against tenants. Landlords can take out specialized legal insurance for homeowners.
6. Intellectual property rights. Disputes related to patents and other intellectual property rights are not normally covered by personal legal insurance. The general legal consultation benefit which comes with some policies can be applied to intellectual rights consultation in some cases.
Possible downsides of personal legal insurance
Legal insurance is relatively affordable, but it has a number of disadvantages. As with other insurance types (with the exception of compulsory insurances), insurance providers have the right to terminated your policy after fulfilling a claim. The rate of policy terminations in legal insurance is higher than that of many other kinds of insurance.
Personal legal insurance providers also have the right to withhold benefits for covered hazards when a case is deemed to be impossible to settle – even when you are legally in the right. When the estimated cost of litigation is very high, insurance providers are allowed to provide reasonable financial compensation instead of committing to cover legal expenses.
Some legal insurance policies give you free choice of lawyer, while others limit choices to partner lawyers. When coverage is limited to partner lawyers, you have the right to request coverage for one of up to three lawyers of your choice. The insurance company is required to accept one of your three proposed lawyers. Using an independent lawyer is advantageous because you can choose a lawyer who specializes in the case in question and the lawyer will do what is best for you rather than what is cheapest for the insurance company.
You are generally required to get a guarantee of coverage from the insurance company before enlisting the services of a lawyer or court of law.
Personal legal insurance is not a must-have for most people. Unless you are exceptionally socially engaged, own property, visit doctors frequently, or have a lot of contacts with various counterparties, the chance that you will become involved in a legal battle is not high.
But life can be unpredictable, and if you are hit with lawsuits or find yourself in a situation where you need to fight for your rights, legal insurance can safeguard your finances and let you focus on settling the case.
If you require legal consultation at least once every two or three years, just the legal consultation benefits which you get with some insurance policies can make up for the cost of premiums.
Comparing policies thoroughly in order to find a policy which matches your risks and financial situation is crucial because choosing insurance which does not cover your needs is a waste of money. The moneyland.ch legal insurance comparison lets you compare and sort policies to find the best deal on insurance which provides the coverage you need.