Legal Insurance Plans: Get Insurance for Legal Services for Less

You shouldn't have to pay thousands of dollars for simple legal problems

Lawyers are notoriously expensive, often charging hundreds of dollars per hour of their time. Many people who would benefit from legal counsel end up getting the short end of the stick because they can't afford a lawyer. The American Bar Association has estimated that about 80 percent of low-income individuals don't get the help they need because they simply can't afford the fees. 

But even those with more solid incomes might wince at what it will cost them if they should ever need legal help. Legal insurance can be a great, relatively inexpensive option when you need guidance or you're not sure you understand your legal rights. 

Who Can Benefit From Legal Insurance?

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Almost anyone can benefit from purchasing a plan because legal insurance really doesn't cost very much. It can help you find advice for many situations that come up as you're starting out in life, buying a home, or starting a family.

Legal insurance can also be beneficial later in life as you sell property, manage your assets, deal with estate management or planning. Seniors are at increased risk of dealing with certain types of scams and fraud. Having access to a lawyer can help prevent becoming a victim. 

For a minimal cost of less than $1 a day with most providers, and as low as $15 a month with others, you might be better off buying coverage rather than wait until you need help and paying sky-high legal fees. Some plans are pricier, however—up to $100 a month in some cases, but you get what you pay for. 

Does Your Home Insurance Cover Your Legal Costs?

Your homeowners' insurance provides some legal cost coverage under its personal liability coverage, and it might offer some coverage for identity theft or fraud, but these are only a few of the legal matters you might face. 

Find out what your home insurance company offers before you make a decision on your legal insurance plan options, the consider coverage to plug the gaps. This could save you some money, so it pays to compare.

Legal Plans By Other Names

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Legal plans go by various names, including "legal protection insurance" (LPI), "prepaid legal plans" (PPL), or just plain legal insurance.

You'll want to ask some specific questions about access to services, as well as whether there are any exclusions, so you can be sure what you're buying. Only when you understand what is being offered can you evaluate the cost.

How Does Legal Insurance Work?

Legal insurance is most often compared to health insurance, where you can be covered for issues that did not exist when you first purchased the coverage. Issues that existed before the purchase of the coverage are sometimes excluded.

Legal insurance is meant to cover unexpected occurrences. If your neighbor says he's going to sue you, you can't rush out and purchase legal insurance that day and expect your coverage to kick in and apply to a situation you already knew about.

There are typically no deductibles or co-payments, however, and some providers offer reduced fees if you have a unique problem that forces you to go out of network for an attorney. You might have to pay the attorney at the time of service, however, then seek reimbursement from the insurer in this situation. 

What Do Legal Insurance and Prepaid Legal Plans Cover?

Coverage conditions vary from provider to provider, but plans often include counsel and legal representation in the certain areas:

  • Buying and selling houses
  • Refinancing, consumer/creditor problems, avoiding bankruptcy
  • Tax questions
  • Adoption 
  • Single parent legal issues and questions
  • Help with contracts and legal documents
  • Preparing legal documents or letters
  • Protecting your rights as a tenant
  • Preparing a will or living will
  • Estate planning
  • Home improvement or contractor issues
  • Consumer protection
  • Traffic tickets

Divorce and family law help can be excluded or limited, so be sure to get full details about waiting periods and eligibility. Existing issues such as an ongoing divorce are usually not covered. 

Criminal violations might not be covered, either, so make sure you inquire fully about this coverage if it's of interest or concern to you. Most plans have exclusions or very specific conditions or limitations.

You generally cannot file a class action suit or small claims suit through these services. 

Where to Get Legal Insurance?

Legal insurance can be included as a benefit of a group insurance plan from your employer. It might also be offered as part of a credit union, union, or other organization that you might belong to. First find out if you already have coverage included through your work group insurance or other organizations before you look into spending money on a personal plan. 

Legal insurance might also be offered by your home or auto insurance company under their specialty product line division, such as the Individual Legal Insurance Plan offered by Nationwide Insurance

Personal legal plans are sold by specific legal insurance providers who specialize in this type of coverage. LegalShield's Protection Plan offers emergency assistance around the clock and unlimited phone calls for about $25 a month as of 2018, and it will set you up with a local attorney for some specialized matters. It also offers discounts with other lawyers who practice outside these specialized areas. 

ARAG has been around for more than 40 years and it's one of the oldest providers of legal insurance with millions of customers around the world. It offers several personal plans you can choose from, as well as extensive helpful resources on their website. Its legal insurance customer testimonials section provides a good range of examples of how legal insurance programs can help save money and get things resolved with the least hassle. 

U.S. Legal Services, Inc. offers a "Family Defender Package" that's been voted "one of the most comprehensive legal plans available to  consumers."

Do Your Homework First

As with any type of insurance policy, do your homework before you pay for coverage. Not all insurers are created equal. Find out what type of services each plan covers and decide whether those services are likely to meet your needs.