How Cover For Legal Expenses Works

Most liability policies cover the legal costs related to a claim under that particular policy, ie. for defending the claim against you.  For example, if you are sued for causing damage to someone’s house, and this damage is covered by public liability insurance, then that policy would cover the associated legal costs.

You can also get separate insurance for “legal prosecution defence costs”. This covers the cost of defending criminal prosecutions against directors or employees of the company while they were going about their work. It’s important to note that it relates to criminal prosecutions, such as an assault or theft charge, not civil claims such as breach of contract.

The legal costs cover described above is only for defending you, it’s not for if you need to take someone to court yourself. There is insurance available that would pay your legal costs if you needed to bring a case against someone else, for example for breach of contract by a client. This cover is difficult to obtain but is available in New Zealand in some circumstances. So, if this is of interest please get in touch.