Legal Expenses Insurance – make the most of it

If you are deterred from filing a tribunal claim because of the cost of legal advice and tribunal fees then read on….. 

The Financial Ombudsman has recently decided that an insurance company acted unreasonably in refusing to pay a tribunal claimant’s full legal fees under his Household Contents Insurance policy.

Many employees prefer to have legal advice in sometimes complex and often stressful tribunal proceedings, particularly where their employer is legally represented. It can be a pleasant surprise to discover that your Household Contents Insurance Policy also covers the cost of legal fees (and tribunal fees).

Reimbursement of these legal fees is likely to be subject to certain conditions, for example notifying the insurer as early as possible of any dispute, the claim having reasonable prospects of success and a requirement that the costs do not outweigh the likely award.

However we are aware that some insurers are reluctant to pay the costs of the insured person’s legal fees in an apparent breach of their own insurance policies. We have recently acted for a client who took matters into his own hands, took his case to the Financial Ombudsman and won.

A Success Story

Our client, we shall call him Robert, had a Household Contents Insurance policy in place for which he was paying each month.  Robert decided that he needed legal advice to help him succeed in his tribunal claims of unfair dismissal and breach of contract against his ex-employer and so he contacted his insurance company about their covering his legal fees.

He was disappointed to discover that they would not pay his solicitor’s full fees. Robert was offered the services of a solicitor from the insurer’s own panel of legal advisers with whom it had pre- agreed rates and for which he would not have to pay.

However, Robert wanted to appoint his own solicitors. He chose us because Morrisons have a team of specialist employment solicitors with the experience to deal with his claim.  He felt it was unfair that the insurance company was, in effect, unfairly limiting his right to choose his own solicitor. We agreed reduced fees to assist Robert in pursuing his claims, but as the amount the insurers would pay was far less than the fees solicitors’ charge, he would still be out of pocket.

Robert and Morrisons Solicitors had to file his claim as otherwise it would have missed the time limit. However Robert refused to accept his insurance company’s decision. He contacted the Financial Ombudsman to ask for help.

What was the Financial Ombudsman’s decision?

The Financial Ombudsman said that:

  • Robert was entitled within the terms of his insurance policy to choose his own solicitor and that, providing the fees charged by the chosen solicitor were reasonable, his insurance company should pay those fees.
  • Morrisons Solicitors’ hourly rates were reasonable and should be met in full by the insurance company.
  • Robert should be paid £300 by the insurers for the distress and inconvenience he experienced due to their treatment of him.

The Ombudsman’s decisions are not legally binding. However Robert’s insurance company took note and paid the full legal fees and the distress award.

We are aware that Robert’s case is not unique. Many similar complaints have been made to the Financial Ombudsman and in some cases it has been decided that it would be fair and reasonable for the insurance company to cover the insured person’s legal fees so they can be advised by their own solicitor.

What should you do?

Before you file a tribunal claim check your Household Contents Insurance Policy and contact your insurers to see if they will cover your legal fees.

If you wish to instruct your own solicitors, you do not need to accept unreasonable restrictions imposed under your insurance policy and should challenge the insurance company if you have sufficient grounds to do so. But challenge early to avoid complications or potential delays to your matter.

For further guidance on this or any other employment law issues, contact a member of our employment team on 01737 854 500 or by email [email protected]


Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.

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