This insurance can save you thousands when buying a house (for real)
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Divorce. Marriage. Drunken driving. Traffic tickets. Real estate. Nursing home abuse. Wills. You might not know it, but one type of insurance can cover them all.
Legal insurance covers attorney fees for almost any legal problem you can face, so long as you use an insurer in your network. Like car insurance protects your finances in the event of an accident, legal insurance takes care of your costs in case of a legal or financial issue that requires the services of an attorney. You might think you only need an attorney if you're charged with a crime or suing someone, but lawyers offer more mundane services as well.
The most common reason people use the legal plans sold by Legal Access Plans LLC and The LegalEASE Group is for divorce, said Robert L. Heston Jr., president and CEO of the companies. The second and third most common uses are estate planning and real estate, respectively. With real estate, attorneys can help clients with buying and selling a house, leasing an apartment, security deposits and a host of other issues.
Many states don't require an attorney to review real estate contracts. Heston, who is licensed to practice law in California and Texas, said this can lead to problems, including litigation, later on. With a legal insurance plan, you can have an attorney review documents at no extra cost.
Buying or selling a house involves pages and pages of documents, from applying for a mortgage to writing a purchase contract to navigating easements.
"People don't spend a lot of time analyzing it and those things can lead to substantial issues down the line after the purchase is made," Heston said.
Anne-Marie Hulsey, director of business development for U.S. Legal Services, a legal plan provider based in Florida, said policyholders can recoup their premiums on attorney fees alone, but also save in having an attorney review the purchase contract.
"Having this document reviewed before signing is important in saving you from potential hidden fees and costs," she said.
After the purchase, attorneys may help homeowners deal with local zoning ordinances if they want to make changes to the property. (As a former municipal reporter who has sat through plenty of zoning board meetings, I can tell you these rules can be a strict, and local officials can be sticklers in enforcing them.) For landlords or renters, attorneys can also help review lease agreements.
Plans typically cost $15 to $22 a month when purchased through an employer, Heston said. (The price is roughly the same if you're purchasing a policy on your own.) Prices for U.S Legal Services plans are in the same range. A wide range of workers buy legal insurance from Legal Access and LegalEASE, he said. Their incomes range from about $30,000 to $130,000 with most people making less qualifying for legal aid services and people making more usually opting for more specialized legal services.
Policyholders don't pay copays or deductibles, Heston said. A policy covers most legal fees, though they may have to pay expenses during litigation like filing fees and deposition costs. An attorney's billable hours are covered either fully or up to a certain limit, depending on the plan. There may also be a waiting period before plans take effect.
Hourly rates for attorneys can range from $240 to $495 or more depending on experience, according to the Laffey Matrix, a widely cited federal guideline. Rates can vary in different areas. With a $15 monthly premium, a legal plan can pay for itself after just one hour of document reviews, Henson said.
Each legal insurer has its own network of lawyers. LegalEASE boasts a network of 18,000. Henson said each attorney undergoes a background check and answers a three-page questionnaire to test how "customer-centric" they are.
Each lawyer is also required to have at least 10 years of experience. Most attorneys who sign on to a legal insurance network won't come from big-name firms who have no trouble attracting clients. LegalEASE looks for experienced local attorneys outside of these firms, Henson said.
Most people purchase legal insurance as part of their work benefits package, but individual plans are available as well. LegalEASE partners with Nationwide to offer both employer and individual plans.
If you're looking for legal insurance, make sure to review any policies for exclusions. Also check to see if there's an attorney nearby in the insurer's network. Henson said it's important for anyone with a family to buy family law coverage, which includes divorce, adoption, child support and child custody.
"They should think about not whether they have a need for a lawyer at the moment they're considering the purchase, but to think about it as more like life insurance," he said. It's something you hope you never have to use, but protects you just in case.
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