Insurance could pay workers’ legal bills

Made-in-Europe practice might provide Canadians ‘greater access to justice’

In principle, Canadians have equal access to justice if they believe they have been wronged. But the high costs of pursuing legal proceedings can act as a barrier for many individuals.

For workers who have a bone to pick with employers — such as wrongful dismissal or harassment — the high cost of a lawsuit often deters a legal claim. They simply don’t have the resources to pursue a court case.

However, the playing field might even out somewhat in employment disputes, as well as other seemingly lopsided legal matters, if a European insurance company receives approval to operate in Canada.

DAS Canada, a Canadian subsidiary of Munich, Germany-based insurance firm DAS International, has applied to the federal Office of the Superintendent of Financial Institutions. The company has immediate plans to make an application to the Ontario government to begin offering legal expense insurance in the province next year.

DAS has been offering this type of insurance since 1928 and currently operates in 16 countries, including the United Kingdom. Since Canada has a similar legal system to the U.K., the company saw it as the next logical step for expansion, said Jas Basra, DAS Canada’s vice-president and chief legal officer.

Legal insurance for individuals, small businesses

DAS plans to offer similar coverage to Canadians as it does to Europeans. For monthly premiums adding up to less than $500 per year, personal legal expenses of up to $100,000 per action will be provided by the company. DAS also plans to offer expense insurance for small- and medium-sized businesses of up to $200,000 per action. Premiums would depend on the size of the company.

Both the personal and business packages would include coverage geared to employment law issues such as employment contracts, in personal insurance, and defence against dismissal claims or breaches of employee statutory rights, in business insurance, said Basra.

In addition to covering expenses, the company also provides legal advice to help clients determine their options. If a claim is accepted, a client goes forward with the action or defence with DAS funding the costs until the maximum limit is reached, regardless of whether the case goes to trial or a settlement is reached, she said.

The limits of $100,000 for personal insurance and $200,000 for commercial insurance are comparable to what DAS offers in Europe and its research into the Canadian market supported those amounts as appropriate, said Basra.

“Our philosophy is affordable justice for all and we hope our products and services will increase access to justice for Canadians,” she said.

Impact in Canada up in the air, details being worked out

It’s still early in the application process and the details of how the claims system will operate in Canada won’t be fleshed out until the company gains approval to go ahead with its business here.

The presence of DAS could have a significant effect on employment law on this side of the Atlantic, said Natalie MacDonald, an employment lawyer and partner with Toronto firm Grosman, Grosman and Gale. But the impact depends on the perspective, she said.

“There could be both pros and cons to this,” said MacDonald. “It has the potential to bring greater access to justice, given the fact the insurance policy amount is minimal and the coverage would be quite great, but it could also open the doors to lawsuits that could be frivolous and vexatious, that should never go to court.”

However, the effects of legal expense insurance won’t be known until it’s clear how the claims process will work within the Canadian legal system, she cautioned.

“It’s important to understand how the system will work, so we’ll have to wait and see,” said MacDonald.

Although the initial plans are to launch in Ontario, DAS intends to expand to other provinces, starting in British Columbia and Alberta later next year, said Basra.

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