What is business legal expenses insurance?
Commercial legal expenses insurance can provide legal help with disputes concerning your business. Think of a disagreement about an invoice or a contract with a supplier. What help you receive depends on the insured modules and terms and conditions. The insurance is not legally required.
Why get legal expenses insurance as a self-employed person?
As a freelancer, you make your own agreements with clients and suppliers. A dispute can cost time and money. Suitable insurance can provide assistance within the cover; it does not guarantee a won case or full reimbursement of all costs. Compare the risk of your assignments with your available buffer and any other legal assistance.
What is insured with legal expenses insurance?
The coverage varies between insurers. Generally, you will get help with conflicts directly related to your work. Many policies include debt collection assistance and contractual disputes. Matters outside your work or deliberately caused by your actions are usually excluded.
Coverage overview
| Potentially insured, depending on the policy | Often excluded or to be insured separately |
|---|---|
| Conflicts with customers over payments | Intentionally caused damage |
| Assistance with negotiations and mediation | Private disputes unrelated to your business |
| Legal proceedings in business disputes | Conflicts that existed before you took out the insurance |
| Advice on contracts and general terms and conditions | Fines and damages you have to pay |
| Collection assistance for unpaid invoices | Tax disputes unless you have additional modules |
Ask debt collection support whether only undisputed claims are handled and what the maximum age of the invoice may be. General contract advice and tax disputes are not automatically included.
Waiting period, threshold amount and choice of lawyer
Check when the cover starts and what the minimum financial interest must be. That threshold amount is different from an excess. Ask what limit applies to external legal fees and under what conditions you may choose your own lawyer or legal expert. Do not engage one without consulting the insurer first. Existing or foreseeable disputes may be excluded.
Is legal expenses insurance compulsory?
No, commercial legal expenses insurance is not required by law. Choose how to arrange legal assistance based on your risk and existing provisions. If you do not have insurance, check in advance who can help you and what costs are involved.
Difference between legal expenses insurance and liability insurance
A corporate liability insurance focuses on liability for covered damage to persons or property. In professional indemnity it concerns covered financial loss due to professional negligence. Such a policy may also include defence against a covered claim for damages.
That still doesn't make a liability policy a general legal expenses insurance for, say, an unpaid invoice. Check the overlap and exclusions in the policies before assuming double or missing cover.
Cost of business legal expenses insurance for self-employed people
The premium depends on profession, turnover, modules, threshold amount and insured external costs. Request quotes with the same starting points and compare annual amounts including any insurance tax and mandatory additional costs. A low premium with too limited cover may turn out unfavourably in the event of a dispute. For administration, also read how to process insurance costs and insurance tax.
Frequently Asked Questions
What does legal expenses insurance for self-employed people cost?
The premium depends on your profession, turnover, modules, excess, and the limit for external legal costs. Compare quotes with the same starting points and look at the total annual amount including any insurance tax and additional costs.
What does business legal expenses insurance cover?
Basic cover includes help with debt collection, contractual disputes, legal proceedings and advice. Additional modules can provide cover for labour disputes, tax disputes or mediation.
Is business legal expenses insurance tax deductible?
Yes. The premium is business and deductible from your profit. You deduct the cost in your records which means you pay less tax.
