Insurance terminology explained in simple terms
Passive Legal Expenses Insurance
In the context of Professional Indemnity Insurance, Passive Legal Expenses Insurance means that the insurer bears the costs of defending against unfounded claims in addition to paying compensation and claims settlement.
This insurance includes, for example legal and court attendance expenses, expert costs, witness expenses or travel expenses. In this context, “passive” means that the service relates to defence against third-party claims (e.g. a warning) and not to the active enforcement of one’s own claims.
Passive legal protection is an important part of Professional Indemnity Insurance, as the self-employed and freelancers have a high risk of disputes that can end up in court or requiring legal representation. Such disputes could be due to violations of rights (GDPR violations, trademark/competition/license/copyright infringements) or contractual disputes with customers or principals. Many people think that their legal expenses insurance will cover these costs. However, that is a mistake that can prove costly. That is because conventional (corporate) legal protection insurance usually excludes exactly these cases.
All Professional Indemnity Insurance from exali.com includes coverage for passive legal expenses.
Term: Passive Legal Expenses Insurance
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