Legal protection insurance for businesses

What legal protection insurance pays when your company ends up in a dispute, how the deductible and the cap work, and which disputes are not covered.

Legal protection insurance pays part of your company's lawyer and court costs when it ends up in a dispute, for example with a customer, a supplier or a landlord. You normally choose your own lawyer. The insurance usually has a deductible and a cap on how much it pays, and it is included in most business insurance packages. In Swedish it is called rättsskydd, and in English it is also often called legal expenses insurance.

How legal protection insurance works

  1. A dispute arises. A customer refuses to pay an invoice, a supplier delivers the wrong thing or the landlord terminates your lease.
  2. You bring in a lawyer. Usually an advocate or a legal adviser of your own choosing. The lawyer applies for legal protection cover from the insurer.
  3. The insurer reviews the application. It assesses whether the dispute is covered by the policy terms and whether the costs are reasonable.
  4. The costs are paid. The insurance pays the lawyer and the legal costs, minus the deductible and up to the cap.

What it covers

Your own lawyer

The fees of the lawyer who represents the company.

Legal costs

The cost of evidence, witnesses and experts, and of investigating the dispute.

The other side's costs

If the company loses in court, it may have to pay the other party's legal costs. Legal protection insurance usually pays those too.

Deductible and cap

The deductible is often a percentage of the cost, with a minimum amount. The cap is the most the insurance pays per dispute. Both are in your försäkringsbrev (the policy document). The company pays any costs above the cap itself.

What is not usually covered

  • The claim itself. Legal protection insurance pays for conducting the dispute, not the amount the dispute is about. Damages the company has to pay belong to liability insurance instead.
  • Criminal cases. If the company or you are suspected of a crime, legal protection cover usually does not apply.
  • Disputes with your insurer. A dispute about the insurance itself is not normally covered.
  • Disputes that started before the policy. The events behind the dispute usually have to have happened while the policy was in force.
  • Simple debt collection. An unpaid invoice that nobody disputes is handled by a debt collector, not by legal protection insurance.

Who needs legal protection insurance?

Any company with contracts can end up in a dispute, and lawyers' fees add up quickly. Legal protection cover matters most to companies with many client contracts, larger deliveries or rented premises. It can be relevant to consultants, IT consultants, accounting firms and advertising and communications agencies.

How much does it cost?

Legal protection cover is often part of business insurance and then rarely has a price of its own. What matters most is what the company does, how big it is and how high the cap is. For more on pricing, see how much business insurance costs.

Example: The delivery the client would not accept. An IT consultant delivers a system that the client says does not meet the contract. The client refuses to pay the final invoice, and the consultant hires a lawyer. The dispute goes to court. Legal protection insurance pays the lawyer and the legal costs, minus the deductible. The consultant only gets the invoice amount itself by winning the case.

Frequently asked questions

Is legal protection cover included in business insurance?

Often. Legal protection is one of the core parts of most combined business insurance policies. Check the deductible and the cap in your policy document. There is more on the core parts in the guide what does business insurance include.

What is the difference between legal protection and liability insurance?

Liability insurance applies when someone claims damages from the company. It investigates the claim, pays the damages if you are liable and defends you if the claim is unfounded. Legal protection insurance applies to other disputes where the company needs a lawyer, and it only pays the cost of conducting the dispute.

Does the dispute have to go to court?

No. Legal protection cover can also apply when the dispute is settled before it reaches court. The policy terms say when a dispute is considered to have arisen and when the cover starts.

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