Legal insurance. Who knew?

Legal insurance. Probably the best-kept secret around these days. Who knew?

If you've got money, you've probably got it, and so do most companies. Professions like lawyers and doctors have it as mandatory - they are covered up to $25,000,000. That's why most claims against doctors settle out of court. 96% to be exact.

When you hear on the news that Bruce Lierman got hit with a $2 million legal bill, don't feel too bad for him. He's likely covered. A $5k insurance excess will take care of that $2 million bill.

This brings up a major question. Why don't courts seem to get the whole legal insurance thing? When they award costs, shouldn't they consider that the real cost for a defendant is probably just their $5,000 excess, not the $2 million bill?

I'm thinking about taking legal action against someone who's insured. My concern is that there might be a strike-out hearing where I could lose, and then I'd be stuck with a $200k bill because my opponent, with their insurance, will have top-notch lawyers defending them. It feels pretty unfair. They'll just use their legal insurance, which will cost them an excess of $5,000, max. The costs awarded against me should I lose should be $5,000, not $200k. Courts are supposed to be for everyone, but their lack of accuracy in awarding costs scares most people away from seeking justice.

I have been to court before when a landlord wanted to take some of my bond. I was in the place for 7 years and paid $500 a week. That means I paid my landlord $182,000 to live in that house for 7 years. They claimed plants in the garden, damage to a wardrobe and a few other things. Going to court was positive as I was able to prove that I planted all of the plants in the garden, so the landlord had no claim on them, however the damage to the wardrobe was disputable. I had changed a cupboard to a sliding door. The sliding door made more sense however the landlord didn't like it. Despite the wardrobe being 20 years old the judge agreed with the landlord and that money was deducted from my bond. I had to pay $1600 when the landlord had an insurance policy with a $500 excess. All landlords have landlord insurance, but tenants are stung for the cost of the accidental damage. The landlords still claim the damage on insurance and simply pocket the extra $1,100. This is not justice, its simply unfair.

Then, imagine being an injured worker claiming Workcover. The employer/government pay $16,000 per day on a senior barrister and $10,000 on a junior barrister. That's $26,000 per day. A matter can run for 2 weeks; that's $364,000 the government spend to ensure an injured worker doesn't get a payout. To compete with the government the injured worker needs a comparative legal team. No-win-no-fee lawyers only go so far. Barristers' costs are outside of this, so the injured worker needs to loan $364,000 to stand a chance at getting their compensation. The employer/government is of course insured so they pay a $5000 excess to cover their $364,000. The injured worker is rarely insured.

To make matters worse, I wanted the jury to know that my employer was insured so they could take this into consideration when awarding damages. My Barrister told me that it would be a re-trial should I give the jury that information. What a joke? Juries think that the damages are coming out the employer's pocket and make conservative judgements based on this. The truth, employers are 100% insured and a massive insurance company who has budgeted for the loss is the only party out of pocket. It's a fundamental flaw in the system, but nobody talks about it.

The solution, make legal insurance accessible to the common bloke, or acknowledge that some parties are insured and ensure that judges take that into consideration when making judgement on cost. The system is supposed to be fair and accessible to everyone. Currently it isn't and that's not on.

Glenn Hall is a Christian writer and freelance consultant. Glenn has a fresh perspective on topical issues and a unique way of viewing the world.   With diverse interests, no topic is out of reach and Glenn will be sure to challenge your thinking.