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Founding your own company, realizing yourself: for many, this is a dream come true. What often goes down, however, are topics such as insurance, which minimize the risks well when starting your own business.
One of these really important insurances is legal protection insurance, which can already be decisive in the preparatory phase of the establishment. Possible risks that can lead to legal disputes are purchase and service contracts, financial bottlenecks, tax, administrative, labor or social law issues, debt collection issues or discrepancies in concluded contracts. Good and quick legal advice can be extremely important here.
danger: Legal protection insurance is not compulsory, but a useful addition if you only have limited financial reserves.
What does legal protection cover?
As a founder and potential employer, you should definitely take out legal protection insurance. The insurance covers the fees for legal advice by a lawyer, for legal counsel and court costs, compensation for witnesses, the costs for an expert and the bailiff. The travel expenses for court appointments abroad are also covered by the legal protection insurance, according to the consumer advice center.
danger: Legal protection insurance only covers the costs of a legal dispute if there is a sufficient chance of success. The insurance can therefore be used if a founder wants to sue or is sued. In this case, she is free to choose the lawyer.
Here is a list of the possible and important types of benefits:
The following types of benefits are usually available from an insurance company Legal protection for founders and self-employed contain:
- Labor law protection: Here the insurance is by your side if an employee takes legal action against you.
- Tax legal protection: If there are discrepancies with the tax return, etc., the insurance will help.
- Compensation legal protection: The legal protection insurance helps with claims for damages.
- Social legal protection: This is where the legal protection insurance comes into force if, for example, there is a risk of a dispute with the employers’ liability insurance association.
- Disciplinary and professional protection: If a partner or employee violates the agreed confidentiality obligation, the insurance helps.
- Data legal protection: The legal protection insurance supports, for example, the enforcement of a correction of incorrect data from authorities or private providers.
The help is often provided by an immediate legal counseling over the phone. They also include out-of-court dispute resolution, a lawyer recommendation, and financial security.
And what does it not cover?
The insurance does not cover fines and penalties, willful acts, construction disputes and divorce disputes.
When does the legal protection insurance take effect?
In the rarest of cases, legal protection insurance takes effect immediately after the contract has been concluded. Most insurance companies usually offer protection after a three-month waiting period.
But there are also insurance companies that sort the waiting times for certain services according to subject areas. In the area of tax and legal protection, you often don’t have to expect any waiting times, but in the area of occupational health and safety.
Every founder who wants to take out legal protection insurance should ask the providers and keep the deadlines in mind. If a legal dispute is already looming, many insurance companies refuse to take out legal protection insurance. So think about it in good time and look for the right insurance.
danger: Legal protection insurance does not offer retroactive insurance protection. If the legal case precedes the conclusion of the contract, the legal protection insurance will not cover any damage.
Can legal protection insurance be canceled?
Of course, if you cancel properly and in good time. The notice periods and contract periods must be observed.
If the range of services offered by your legal protection insurance no longer meets your needs or if you find an insurer with a better price-performance ratio, then it pays to think about terminating the contract.
The following data must be provided for a termination:
- Name and address of your insurer
- Names and full addresses of the insured
- the insurance number
- a termination date or the statement: “Termination with immediate effect”.
- in the case of extraordinary termination, the reason for the special termination right must be stated.
But if you cancel, make sure that there is no insurance gap. The waiting times and notice periods are important here!
PLEASE DO NOT FORGET: An insurance company can also terminate you. The concluded contract is not unilateral!
Author Carolin Schäufele
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