All about Corporate Legal Expenses Insurance

Businessman in suit

Corporate legal expenses insurance (CLEI) covers different types of legal expenses that are incurred by a policyholder. It is often writer on the basis of a group. CLEI solutions help provide clients with access to legal guidance and advice, along with coverage for costs that are associated for pursuing legal action once the claim is accepted. It is for both the case that is brought against and brought by the policyholder.


What Is Corporate Legal Expenses Insurance (CLEI) Exactly?

CLEI is a form of legal protection insurance. It helps protect the company against the cost of defending itself where someone files a lawsuit. The insurance policy has been designed to protect the company from costs associated with lawsuits brought by a third party. The policy even covers costs like court fees, witness expenses, lawyer fees and for hiring expert witnesses. Sometimes, CLEI, translated Firmenrechtsschutzversicherung in german, may even cover legal costs that are related to the intellectual property and brand protection of the company.


Who Requires Corporate Protection Insurance?

The corporate protection insurance is necessary for every entrepreneur. It is common for legal disputes to arise from commercial activities. Besides, the cost of hiring a lawyer and paying court fees can be overwhelming and can take a toll on the overall expenses of the company. Startups can find themselves to be in a legal grey area or battling legal disputes on a routine basis which is why CLEIs are vital for every type of business, whether small or large.

Just about every type of business has exposure to lawsuits and there are some which are more vulnerable than others. There are always headlines on news channels about suits being filed against doctors and manufacturers, independent contractors and companies. Hence, one would face the headache that comes with a lawsuit.

Financial advisors and money managers can purchase corporate legal expenses insurance for their own protections from clients that believe the business is responsible for the money lost. Larger companies are more likely to face the threat of real lawsuits such as for financial audits, wrongful termination claims, unequal employment opportunities and others.


Two Basic Types of Legal Expense Insurance

Before-the-Event (BTE) and After-the-Event (ATE) insurance are the two basic types of legal expense insurance. Although, BTE insurance is more common, ATE offerings have started to steadily grow in popularity throughout the world.


Normally, BTE insurance policyholders are small or medium-sized businesses that do have sufficient resources to have an in-house counsel. Individuals can also purchase CLEI in order to effectively respond to unforeseen legal events which could considerably impact the business.


ATE insurance is meant to protect the policyholder after the claim comes up. It pays out all of the disbursements which the lawyer incurs for pursuing the case. Without this policy, the plaintiff would have to go to trail and chances are that the plaintiff would end up owing more than the costs to defend the action.


Risks Covered by Corporate Legal Expenses Insurance

Businesses and individuals that require access to a lawyer will be able to receive one through the corporate legal expenses insurance policy. The policyholder would still get legal assistance even if they do not have the capital to pursue the legal dispute. It allows them to pursue their rights and defend themselves in the legal system.

When it comes to a BTE legal expense policy, some of the issues cover for the business owner include VAT returns, a notice of enquiry into taxes, disputes with employees or even a health and safety inspect which leads to a threat for the prosecution of the business.

A CLEI policy supports different types of businesses, whether it is a restaurant, dance studio, landscaping business or any other type of business.


Protection against Potentially Huge Future Legal Costs

CLEI helps provide protection to businesses and even their employees from any potentially huge future legal costs. It is important for a company to be prepared for dealing with legal costs at all times and with the help of CLEI, it is easy to do so.

Before a business purchases corporate legal expenses insurance, it needs to examine its current insurance coverage in order to determine whether the risks have been fully covered and for the identification of areas where a gap in coverage might be.


Real Life Example

For instance, a client might claim that the financial advisor has not advised them about the worsening of economic conditions and the client might have actually avoided the loss. The company might consider getting a corporate legal expense insurance policy if the advisor’s company has a liability insurance which does not cover legal expenses.


What Does Corporate Legal Expenses Insurance Not Cover?

Now, the coverage varies from provider to provider, but there are certain things which are normally not covered by the policy. The following are examples of what might not be covered.

  • Issues which had started before the policy was purchased.
  • Legal costs that had been paid out before the claim was accepted.
  • Civil claims that have a less than 51% likelihood of success after evaluation.
  • Anything that has been specifically excluded in the policy.


Why a Corporate Legal Expenses Insurance Is Useful?

Courts deal with thousands of civil claims every month. In addition, there are many thousand lawsuits that are filed at labor tribunals. There are more than ten thousand laws and regulations which people have a tough time keeping track of. Due to their ignorance, people suffer from punishment.

Corporate legal expenses insurance secures entrepreneurs from the high costs of a legal dispute. There are other names for the insurance as well such as industrial legal protection insurance and company legal protection insurance. It can be great to get a good return for your money.



There are many benefits of corporate legal expenses insurance and it is due to this reason that it is extremely popular among businesses. Make sure to buy a policy early on to avoid having to suffer from any legal costs in the first place.