This article was produced in partnership with ARAG Legal Solutions Inc.
Desmond Devoy, of Insurance Business Canada, sat down with Jeff Kless, vice president, marketing and strategic initiatives, and Patil Dadayan, senior marketing specialist, with ARAG Legal Solutions Inc., to discuss the results of an eye-opening survey on the personal and financial impacts of legal life events on Canadians.
Like a doctor, you hope you never need a lawyer, but you’re glad one is there when you do.
But unlike healthcare in this country, legal representation comes at a direct cost to the client - and the impact of legal action not only on a person’s finances, but also mental well-being, can be huge.
This past July, ARAG Legal Solutions Inc. contracted Forum Research to speak to more than 2,500 Canadians who had handled a legal dispute during the last three years.
The results were compiled in a new report, “Legal Life Events: When They Happen, They Hurt,” and underscore the need for personal legal insurance.
“I always reinforce that legal risks are ever present. The assumption that legal life events are rare, or convincing yourself that you won’t encounter them personally is far from the truth,” said Jeff Kless (pictured), vice president and strategic initiatives, with ARAG Legal Solutions Inc. “Odds are a legal event will happen to you and your customers. What happens next?” said Kless.
Among the many eye-opening numbers to be found in the report:
The survey also discovered that the top five legal disputes among respondents were:
Whether they hired a lawyer or not, there are other costs associated with legal proceedings. Among those surveyed, 65% reported a large to moderate impact on personal finances. Further to this:
While the impact on finances is serious enough, legal life events have far-reaching consequences beyond the pocketbook, impacting mental health and job performance.
“When Canadians have to handle a legal dispute, it’s not just financial,” Kless said. “The impact on daily life and especially on mental health is really astounding.”
Notably, about 54% of those surveyed reported a large to moderate impact on their performance at work. Further:
Away from the office, the survey found that 71% reported a large to moderate impact on their and/or their household’s mental health:
A further 12% reported that they had lost their job because they were handling a legal dispute. “This was a very striking insight for us, and again reinforces the high costs that Canadians face when facing an unexpected legal issue, that extends beyond just paying legal fees,” said Kless.
“People end up wound up, their time is being taken away from their daily activities, there’s stress, anxiety, and other issues occurring; they are really paying the price,” Kless said. “Why do you have to deal with these extra pressures? It hurts people financially and mentally.”
Kless stressed that the insurance industry needs to talk about this issue more and there are solutions in place, like legal expenses insurance, which started in Europe about 100 years ago. It can be part of a core home policy, but it can also be made available through groups and associations where individual coverage can be provided.
If it is a claimable event, a lawyer can step in and take over, and put the client’s mind at ease. For example, one of ARAG’s clients is a medical association, and this legal coverage is provided to its members.
The survey also asked if, as a hypothetical, legal expenses insurance could be added to their home policy at a rate of $5 per month, or $60 per year, how many would purchase it. The answer? Seventy-three per cent (73%) said “yes”.
“Your standard homeowners’ policy is not going to cover a tax audit. Your standard homeowners’ policy is not going to help if you are fired, and you’re given unfair severance,” Kless said. “We do have access to justice challenges in this country, because of the costs and side effects of having to deal with a legal dispute. Lawyers are expensive. The legal system is slow and methodical and complex…If you can hire a lawyer, and even better, have your insurer pay for that lawyer, it is going to make your life easier and, more than likely, you’re going to get a better result than trying to resolve the issue on your own.”
But what about the big divide between Baby Boomers, Gen X, Millennials, and Gen-Z?
“The generational gaps…that was interesting to me, because my generation is now included in the conversation, we are experiencing legal issues and potentially are more vulnerable to the issues around access to justice and the costs of the legal system,” said Patil Dadayan, senior marketing specialist, with ARAG. “It’s an interesting thing that jumps out at me and says that the impact (of legal action) is a lot stronger on an individual level versus a business level because of everything that’s happening with financial and mental health.”
In closing, Kless urged brokers and other members of the insurance industry to “discuss legal risks and their impacts,” since “we owe it to our customers. Let’s reduce the damage caused by unexpected legal events for Canadians,” by giving clients the peace of mind that, with this coverage. “You will always know that you are going to have access to a lawyer for legal assistance. That a lawyer is going to help you. And you’re not going to see a bill at the end of that, which you cannot afford.”
To find out more about ARAG, visit them online at: https://www.arag.ca/en/
