Commercial coverage

Advising commercial clients on the cover that they need is rarely an easy job, especially
when talking to small or even medium-sized businesses that may have limited
experience in such matters. Terminology that we all use every day can be confusing to
some insurance-buyers and it is vital to make sure the client knows exactly what risks
they are insured against but also what cover they have opted not to take.

One of the most attractive features of commercial legal expense insurance is that it fills
several potential gaps in coverage, insuring risks that a business might be forgiven for
thinking they were protected against, but probably are not. We often refer to legal
protection as the “missing piece of the jigsaw” because it fits so well with other types of
commercial insurance to provide a more complete package.

Asserting legal rights

For example, any standard commercial general liability (CGL) policy should protect the
business against a claim from a third party who has been injured or had their property
damaged as a consequence of its business activities. What happens though, if the
business wants to pursue a claim against a third party if it is the company’s property that
was damaged or one of its employees who was injured.

Asserting a company’s legal rights can be cripplingly expensive, especially if the third
party your client is trying to pursue is a much bigger organization, with much deeper

Fortunately, legal expense insurance is designed to help the business pursue a claim if a third party was to damage, trespass on or cause a nuisance to the business property. Extra protection is also available to protect company employees, should they be injured by another person or face civil proceedings for discrimination or as a trustee of the company pension fund. It even extends legal and practical support to an employee who might find themselves the victim of identity theft.

Legal protection benefits

Legal expense insurance can help to protect businesses and their employees against potentially huge future legal costs by asserting the insureds legal rights. Legal expense insurance can also help protect individuals or businesses in legal proceedings through the panel of lawyers that is kept on retainer, who specialize in a vast range of areas of law.

Directors and officers (D&O) products as well as errors and omissions (E&O) cover do offer protection in the event of allegations that company failings have resulted in financial loss, but what happens if the business should face criminal charges or a police investigation? The legal defence cover that legal expense insurance provides can be vital in such circumstances.

D&O cover is also very useful to protect company officers if the company falls foul of the tax authorities, but it won’t pick up the bill if the business has to undergo a federal or provincial audit or wants to appeal an unfavourable decision by the CRA. Again, the tax protection available in a good legal expense insurance policy is there to fill the gap.

Fill in the gap

Legal protection policies offer many more benefits besides these examples, not to mention the legal advice helpline that is there to provide answers to any question a policyholder might have about the legal aspects of running their business.

Whether dealing with employee disputes or regulatory investigations, legal protection offers a new level of risk management in areas often left exposed by other insurances, to provide more complete protection for commercial clients.

We’re always happy to explain how legal expense insurance can fill the gaps.


Read further articles

Canadians shouldn't have to stand alone in court

The increasing number of unrepresented litigants trying to navigate our justice system is a growing problem, not only for them personally, but for our courts as well. Jo-Anne MacDonald, CEO of ARAG, says that legal protection could be a key part of the solution.

Legal expense insurance takes risk management to a new level

While the threat of legal action may not be new to business owners, the opportunity to mitigate is a vital development in commercial risk management.

How ARAG can help

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