Commercial legal protection: a quick guide

Anastasia Filatova
04 March 2020
4 minute read

From contracts and client agreements to a court summons, your business is going to hit a few legal issues. Some are standard, like onboarding a new employee , others take up time and attention, like a tax enquiry or dispute. Large businesses will probably have an in-house lawyer, or even a legal team, to handle these things. But if you’re running a startup, or smaller business, you might not have that option.

Commercial legal protection

Commercial legal protection is a comprehensive solution, whatever stage of business growth you’re at. It’s a support for day-to-day legal tasks – featuring an expert tax advice helpline – and a backstop for bigger, more isolated issues. What is commercial legal protection? Keep reading for an at-a-glance guide.

Sometimes just known as ‘legal protection’, this insurance provides cover against the cost of taking legal action against someone else, as part of your business activities. It can also cover your business for defending legal action.

We include cover for solicitor fees (or barristers and accountants), along with your court costs – these can mount up – and in some cases compensation claims, usually relating to an employment dispute or tax return issue.

Not sure if it’s for you? See our commercial legal protection example below for how these issues could apply to your business.

What support does it give?

Tax, VAT and HMRC

Many businesses come up against a tax issue at some point, or receive an enquiry from HMRC. Alongside an expert tax helpline, our commercial legal protection keeps you covered if the issue becomes complex and costs mount up. It’s also designed to work with VAT disputes, HMRC compliance issues and even the government’s impending IR35 legislation.

Employees

There’s a bit more detail under DAS tools and expertise below, but alongside their employment manual and BusinessLaw features – these can help you out with regular contract and procedure questions – you’ll get cover for legal expense and compensation costs for employee legal issues, for example, unfair dismissal.

Watch out! This isn’t the same as employers’ liability insurance, which covers you for very different risks, such as an employee being injured as a result of working for you. For more details on what employers’ liability is, take a look at our 101 guide to employers’ liability insurance. It’s a legal requirement for most businesses who have employees.

Taking legal action

Your business and workspace needs to be safe, for you, your employees and clients, and anyone else involved. If a situation comes up, such as damage caused by trespassers, and you need to take action, commercial legal protection can cover the associated costs.

Court

Commercial legal protection can cover court fee payments and attendance costs, as well as charges for a barrister’s help. Court proceedings can drag on and end up being very expensive, so comprehensive legal protection is an essential support for many businesses.

Certain legal disputes

Disputes can come out of lots of different contracts and scenarios. For example, when IR35 (see Tax, VAT & HMRC above) comes into play, it will affect thousands of contractors across the UK. If a dispute arises because of this new bill, commercial legal protection will provide important cover.

  1. With the implementation of IR35 affecting contractors, Legal Expense cover can provide protection when dealing with the HMRC and disputes that arise from this new bill.

  2. If you’re a regulated business, your registration with the FCA is important. If for some reason the FCA decides to revoke a license, there will be cover for appealing the decision under DAS legal expenses

DAS tools and expertise

Your commercial legal protection policy will be underwritten by DAS, the market leaders in the sort of specialist legal protection required by small businesses and startups.

As part of your policy, you’ll get access to the DAS employment manual – a comprehensive day-to-day guide to best practice – and DAS BusinessLaw, which helps you create and download your own legal documents.

How is it underwritten?

Commercial legal protection with Digital Risks is underwritten by DAS, who are market leaders in specialist legal protection. As a team, we’ve created a policy which provides DAS-supported tools, from the DAS helpline to their DAS employment manual and access to legal document downloads.

There are hundreds of examples, but here’s a real-life one.

Let’s say your business hires a freelance designer for a seasonal marketing campaign, who delivers their artwork in the wrong format, with the original files deleted. Along with the obvious headache, this could end up being an expensive mistake for you and everyone involved, with delays to the campaign and profit losses. Depending on the level of damage, you may need to seek a court dispute resolution.

In this case, commercial legal protection could kick in to cover you for court and other associated costs, whilst giving you support through a helpline.

How much does it cost?

Our cover is built specifically for startup and smaller businesses, giving you advanced legal protection without the need for an in-house legal team. You can buy it alongside other important covers, such as a public liability policy, or add it to your existing policy. Right now, it costs just over £10 a month.

Is there anything I should know?

You’ll need to buy your Digital Risks commercial legal protection policy alongside one of our other key policies, such as public liability insurance, professional indemnity insurance or employers’ liability insurance. It’s not a stand-alone policy.

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