Free choice of lawyer does not automatically mean that your legal expenses insurer will pay every lawyer’s bill without limit. A cost cap may apply, but it must not hollow out the right of choice in practice. Ask for the applicable budget, the policy basis, the costs included and the conditions for consent. Then substantiate why the reimbursement offered is insufficient in your specific case.
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Written by Onur Arslan, attorney at Arslan Advocaten. Registered in the specialisation register of the Netherlands Bar for employment law and personal injury. Onur Arslan practised for many years as a corporate lawyer and insolvency trustee (curator) and has extensive experience in financial law disputes. Last updated: 22 September 2026.
You may choose your own lawyer, but you are given a budget that, according to that lawyer, is barely enough to conduct proceedings. That gap calls for more than a discussion about hourly rates. First, it must be clear which case, which stage and which costs fall under the amount promised.
First establish whether free choice of lawyer applies
The right to a free choice of lawyer and the cover for the case are separate questions. Free choice does not turn an uninsured dispute into an insured one. Nor does every form of out-of-court assistance automatically carry an unlimited right to instruct a lawyer of your own at the insurer’s expense.
Check the statutory position, the type of proceedings and any conflicts of interest. Then ask for written confirmation of cover and of the way in which the lawyer will be instructed. The general principles are set out in our article on free choice of lawyer under legal expenses insurance.
Which costs fall within the cap?
Ask whether the cap applies per event, per dispute, per set of proceedings or per insurance year. Also check how related matters are treated. A single conflict may involve several claims or procedural stages without automatically giving rise to several budgets.
Have the insurer specify whether VAT, court fees, bailiff’s costs, experts, translations and any costs order in favour of the other party fall within the same amount. Also ask how much of the budget has already been used and which earlier costs have been charged to it.
With an announced amount of € 10,000, there can be a big difference between a budget solely for the lawyer’s fees and an overall budget including all external costs. Use that amount only as an illustration; the actual limits differ from policy to policy.
May an insurer apply a separate cap?
Policies may contain different limits for different situations. Whether a particular restriction may be applied requires an assessment of the contract and of the statutory protection of free choice. The mere fact that an external lawyer is more expensive than the insurer’s in-house claims handler does not automatically make a cap invalid.
Conversely, the insurer cannot simply point to an amount without applying the correct policy provision. Ask how the restriction was agreed, how it is being applied to your situation and whether the right of free choice remains workable in practice.
Distinguish between a dispute about the interpretation of a clause and the question of whether applying it in your specific case leaves insufficient room for the right of choice. Each may require different evidence.
The statutory basis is Article 4:67 of the Financial Supervision Act (Wft): the legal expenses insurer must expressly state in the policy that the insured is free to choose a lawyer or other legally qualified expert to defend, represent or serve his interests in judicial or administrative proceedings, and also whenever a conflict of interest arises. That provision derives from the European directive on legal expenses insurance (now incorporated into Solvency II, Directive 2009/138/EC). The Court of Justice of the European Union has ruled on this that Member States may permit a cost cap, but that the chosen restriction must not render the free choice illusory in practice. That is the legal core of your dispute: not whether a cap may exist, but whether it hollows out the right of choice in your specific case.
Kifid ruling 2023-0790 (Kifid, the Dutch Financial Services Complaints Tribunal) concerned a stalled instruction to a lawyer. In that case Kifid required the instruction to be given after all, while the assessment of reasonable and necessary costs could take place afterwards. That does not abolish cost caps in general, but it underlines that instructing the lawyer and controlling costs must be carefully coordinated.
Substantiate that the budget is insufficient
Ask your lawyer for a budget per procedural stage: file analysis, pleadings, hearing and conclusion. Have it distinguish the necessary work, the expected hours, the rate and the external costs. Identify the complexity of the evidence, the number of parties and any mandatory expertise.
A quote from one lawyer does not always prove that effective legal assistance is impossible within the budget. Other suitable quotes or concrete information about the market can strengthen your case. The comparison should be about an appropriate handling of this case, not about the most expensive approach imaginable.
Also explain why costs cannot reasonably be deferred or reduced. An extensive expert investigation may be necessary in a technical dispute, whereas other work may perhaps be budgeted in stages.
A budget without surprises
Draw up a simple overview of the available budget, amounts already spent, expected necessary costs and the shortfall. Ask the insurer which items it objects to on substance. This prevents the discussion from getting stuck at ‘too expensive’ versus ‘too little’.
| Item | Amount | Explanation |
|---|---|---|
| Budget promised under the policy | € 10,000 | Ask whether this is inclusive or exclusive of VAT, and whether the excess has already been deducted |
| Less: excess | − € 250 | According to the policy schedule |
| Less: costs already incurred (orientation and correspondence) | − € 1,750 | According to the lawyer’s most recent time specification |
| Available | € 8,000 | |
| Expected: fees for the first stage (proceedings up to and including the hearing) | € 6,000 | Lawyer’s estimate, 20 hours × € 300 |
| Expected: court fees | € 700 | Does this fall within the budget, or does the insurer reimburse it separately? |
| Expected: expert report | € 800 | Necessary for the evidential position |
| Total expected | € 7,500 | |
| Remainder for unforeseen developments | € 500 | Insufficient for an additional hearing, a witness examination or an appeal |
Ask in advance what happens if unforeseen procedural developments arise and whether a top-up is possible.
Agree with your lawyer who pays once the budget has been reached, when you will receive a warning and what consent is needed for additional work. Your instruction to the lawyer and the reimbursement by the insurer are not automatically the same arrangement.
Do not start without clarity on instruction and reimbursement
Instructing a lawyer yourself in advance can create a cost risk if the insurer requires prior engagement or coordination. Ask for consent in good time and provide the necessary budget. In urgent cases, it must also be recorded which steps are needed immediately.
If the insurer does not respond while a deadline is running out, document this and ask for an immediate decision. Have it assessed which protective procedural step is required. Silence on the part of the insurer does not automatically amount to unlimited consent for all costs.
Complaining about a cost cap
State in writing which policy clause is being applied, why you dispute that interpretation or application and what additional budget you are requesting. Enclose the budget, the relevant deadlines and the specific procedural requirements. Ask for a reasoned decision on each disputed point.
A budget dispute is not automatically suitable for the dispute resolution procedure on legal merits. If the disagreement is precisely about whether a procedural step is necessary, that procedure may well be relevant. Make the distinction explicit; see the dispute resolution procedure in legal expenses insurance.
After the internal complaint, Kifid may be an option. A review by the civil courts may also be possible. In the meantime, keep the underlying case and the payment arrangements with your lawyer under control.
Related conflicts and a single cost cap
A policy may treat several disputes as one event or as a connected whole. Ask which facts the insurer relies on for this. An employment dispute, an insurance dispute and a liability claim are not necessarily always one case, but the existence of different opposing parties does not automatically mean that each gets a new budget either.
Hourly rate, disbursements and remaining budget
Ask for a breakdown of the cap, the amounts already used and the costs that count towards it. VAT, experts, court fees, translations and any costs order in favour of the other party can affect the available room. Record whether an agreement on rates concerns only the fees or also the additional costs.
A cost cap may not simply render the applicable right of choice meaningless, but the right of choice is not an unlimited budget either. The policy, reasonableness and the specific case must be assessed. Draw up a budget per stage and agree when further consultation will be needed.
Appeals and additional proceedings
An instruction for the first set of proceedings does not automatically cover an appeal, enforcement or separate interim measures. Before the next step, ask for a decision on cover, merits and budget. Meanwhile, the time limit for appeal keeps running. Also read about refused dispute resolution procedures and free choice in UWV cases.
Frequently asked questions about the cost cap
Is free choice of lawyer always free of charge?
No. The right of choice must be distinguished from the extent of the reimbursement of costs. A cap, personal contribution or other applicable arrangement may be relevant.
May I choose a lawyer with a higher rate?
That may leave you with a payment obligation of your own. Discuss in advance which rate will be reimbursed and how any difference will be dealt with. Also have it assessed whether the restriction is legally tenable.
Do I get a new budget for an appeal?
Not automatically. Check whether an appeal falls under the same cap and whether prior assessment or consent is required. Ask about this before any costs are incurred.
Do court fees count towards the cap?
That depends on the policy. Ask for an overview of all costs included. The fee budget quoted alone does not tell you how much money is available for the proceedings as a whole.
Does the insurer have to increase the budget if my lawyer asks for it?
Not as a matter of course. A budget with concrete reasons is, however, important for the assessment. The necessary legal assistance, the policy and the effective exercise of free choice must be considered together.
What if the budget runs out during the proceedings?
Immediately ask for an up-to-date statement of costs and discuss the next steps with your lawyer and the insurer. Make sure necessary deadlines are monitored and make written arrangements on continuation, additional costs or a settlement.
Make cover, budget and instruction fit together
Would you like to know whether the cost cap offered is sufficient and has been applied correctly? Contact Arslan Advocaten with your policy, confirmation of cover and budget. More on disputes with insurers can be found under insurance law.
Legally reviewed by Onur Arslan, attorney at Arslan Advocaten. Reviewed on 13 September 2026.
