Don’t let your insurers choose your lawyers for you
December 17, 2013
If you've had an accident in your car, the chances are your own insurers will offer to deal with your claim for your uninsured losses including any personal injury you suffered. Stop and think before you say yes to that because they might not have your best interests at heart.
Even if you've paid for legal expenses cover on your policy, your insurers will still try to deal with your claim in the cheapest way possible.
Before April 2013, insurers were in the habit of selling your claim to a panel of their approved solicitors, for sums upwards of £700 a go. But these "referral fees" were banned in April so insurers have had to find other ways to make money from your accident, especially as they quite often gave the legal expenses policy away free or charged only a very minimal premium for it.
Their new wheeze is to start an "alternative business structure" or ABS which means that they can now own law firms and share their profits. Some insurers have already had their ABS approved by the Solicitors Regulation Authority – so Admiral effectively owns Lyons Davidson and Cordner Lewis. And Ageas and Fortis who underwrite Tesco motor policies have an arrangement with New Law Solicitors.
Other insurers are looking to make similar arrangements.
You have to stop and wonder who would put your interests first – the insurers who will have to pay out for the costs of your claim if you lose (and who own the solicitors they send you to), or the independent solicitors you choose for yourself? If the solicitors are owned by the insurers – or at the very least, dependent on them for the work – isn't there a danger they will want to settle the claim as quickly as possible to minimise the risk of their paymasters having to pay out for their costs? Your policy will normally require you to authorise the solicitors to tell your insurers everything about your claim and to get their permission to spend any money they need to prove your case.
You don't have to use the solicitors your insurers recommend. You are entitled to choose your own lawyers.
Even if you have legal expenses insurance on your motor or household policy, you don't have to use it. If you do, there is always the risk that your no claims discount will lead to a higher premium next year but that is nothing compared to the risk that you won't have full control over your own claim. Don’t be fooled into thinking your insurers are on your side – they will always be on their own side trying to maximise profits for their shareholders by minimising what they pay out for your claim.
By Beth King, partner and head of personal injury
The information contained in this article is intended for general guidance only. It provides useful information but it is not a substitute for obtaining legal advice as the articles do not take into account specific circumstances. So do please Contact US for legal advice on the issues raised.