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When Insurance Won’t Cover Your Lawyer Fees: 7 Common Exclusions

We all hope that our insurance will cover the unexpected—whether it’s car accidents, medical emergencies, or property damage. But what happens when you find yourself in need of a lawyer and discover that your insurance won’t pay for attorney fees? From criminal charges to personal injury lawsuits, there are many scenarios where insurance doesn’t cover your legal costs. The reality is that not all legal situations are created equal, and your insurance policy may have exclusions that leave you with significant out-of-pocket expenses.

In this post, we’ll dive into 7 common situations where your insurance won’t help cover lawyer fees, so you can be better prepared and avoid the financial strain of unexpected legal costs.

 

1. Criminal Defense Cases: Why Insurance Won’t Cover Your Lawyer Fees

One of the most common reasons insurance doesn’t cover lawyer fees is when you’re facing criminal charges. Whether you’re accused of theft, DUI, or more serious offenses, your auto, homeowners, or general liability insurance won’t typically cover the cost of defending yourself in a criminal case.

Why is Criminal Defense Excluded?

Insurance is designed to protect you from accidents or unintentional harm, not from criminal acts you are accused of committing. Criminal defense often involves significant legal expenses, and since criminal law serves to punish intentional wrongdoing, most policies exclude these types of claims.

Did You Know? Criminal defense attorneys charge $100 to $400 per hour, and serious charges can result in legal costs reaching tens of thousands of dollars.

 

2. Intentional Acts: When Your Insurance Won’t Cover Legal Fees

If you’re sued for something you intentionally did—such as committing fraud, assault, or defamation—your insurance will likely exclude coverage for the legal fees required to defend yourself.

Why Are Intentional Acts Excluded?

Insurance is designed to cover accidents and unintentional damage. Intentional acts, on the other hand, are seen as your own responsibility. So, if you engage in behavior that causes harm to others on purpose, your insurance provider will not cover the resulting legal fees.

Did You Know? Defamation lawsuits, which can arise from slander or libel, can cost anywhere from $10,000 to $1 million in legal expenses.

3. Personal Injury Claims (Your Own Injury): Insurance and Legal Fees

Your auto insurance or health insurance may cover medical costs if you’re injured in an accident, but it won’t pay for the lawyer fees if you need to pursue a personal injury claim against the responsible party.

Why Are Legal Fees Not Covered in Personal Injury Cases?

Personal injury claims are typically about seeking compensation from someone else who is at fault, so your own insurer won’t usually help pay for your attorney fees. You’ll need to arrange alternative coverage or handle the legal costs yourself.

Did You Know? Personal injury cases can settle for anywhere from $3,000 to $75,000, with attorneys typically taking up to a third of that amount in fees.

4. Business Disputes and Commercial Litigation: Legal Costs for Businesses

For business owners, legal disputes are an unfortunate reality. Whether it’s a breach of contract, intellectual property issue, or a lawsuit from a customer, general liability insurance won’t usually cover your attorney fees in commercial litigation.

Why Don’t Business Insurance Policies Cover Legal Fees?

Business insurance protects against risks like property damage or employee injuries, not the legal costs associated with business disputes. These types of claims are considered part of the normal business risk, and insurance providers expect you to manage them separately.

Did You Know? Legal fees for business litigation can range from $10,000 to $100,000 or more, depending on the complexity of the case.

5. Divorce and Family Law Cases: No Coverage for Family Disputes

Divorce, child custody battles, and spousal support cases are deeply personal matters, and your insurance won’t cover the attorney fees associated with them.

Why Are Family Law Cases Excluded?

Insurance is generally designed to protect against unforeseen events, not personal matters such as family disputes. Family law matters are considered personal, and most policies do not cover the costs of hiring a lawyer for divorce or custody cases.

Did You Know? The average cost of a contested divorce in the U.S. can easily reach $15,000, depending on the complexity of the case.

6. Defamation Lawsuits: Insurance and Reputation Defense

If you’re facing a defamation lawsuit for something you said or wrote, your insurance policy likely won’t cover your attorney fees. Defamation cases, whether they involve slander or libel, are usually excluded from most insurance coverage.

Why Are Defamation Claims Not Covered by Insurance?

Defamation involves intentional acts that harm someone’s reputation, and insurance typically excludes these types of claims. Since defamation cases involve personal reputation and wrongdoing, they don’t fit within the scope of standard liability coverage.

Did You Know? Defamation lawsuits can cost anywhere from $10,000 to over $1 million in legal fees, depending on the nature of the case.

 

7. Punitive Damages: Why Your Insurance Won’t Cover Court-Ordered Penalties

Even if your insurance covers your legal fees in a lawsuit, it likely won’t cover punitive damages. These damages are meant to punish you for particularly egregious behavior, rather than to compensate the plaintiff.

Why Aren’t Punitive Damages Covered by Insurance?

Punitive damages are not about reimbursing losses—they’re about deterring wrongful behavior. Insurance is designed to cover compensatory damages, not penalties or fines imposed by the court.

Did You Know? In some cases, punitive damages can be up to 10 times the amount of compensatory damages awarded.

How to Protect Yourself from Unexpected Legal Costs

Knowing when insurance won’t cover lawyer fees is essential, but it’s just as important to prepare for the potential financial burden of a legal case. Here are some steps to ensure you’re financially ready for legal expenses:

Review Your Insurance Policy: Make sure you fully understand what your insurance covers and what it excludes.

Consider Legal Expense Insurance: Some policies offer legal expense coverage for certain types of cases, such as business disputes or personal injury claims.

Create a Legal Fund: Setting aside money specifically for legal expenses can help you avoid financial strain if a lawsuit arises unexpectedly.

Explore Legal Financing Options: In some cases, you can get financing for legal costs or arrange a contingency fee with an attorney, where you pay only if you win the case.

Protect Your Future with OLInsure

While insurance can help with many unexpected expenses, it’s important to recognize where gaps in coverage might leave you exposed. Whether you’re facing a legal battle related to personal injury, business litigation, or family law, you don’t want to be caught off guard by expensive lawyer fees. OLInsure can help you find the right insurance to cover legal costs and protect your financial future.

Register today for a free quote and see how we can help you secure the right coverage to keep you covered in times of need.