The costs of a lawyer in an insurance dispute can play an important role when you are involved in a conflict with your insurer. Many people wonder exactly what costs they can expect, whether they are entitled to funded legal aid, and how they can limit these costs. In this blog we guide you through the legal aspects surrounding the costs of a lawyer in an insurance dispute. We explain how these costs are structured, what financing options you have, and how, as a consumer, you can protect your rights.
What are the costs of a lawyer in an insurance dispute?
The costs of a lawyer in an insurance dispute consist of several components. First, the lawyer charges you an hourly rate, which can vary depending on the specialization, the experience and the location of the law firm. In addition, there may be office costs and possibly court costs. In an insurance dispute, for example, it may involve recovering damages, challenging a rejection by the insurer or conducting objection procedures.
The total costs depend on the complexity of the case, the required time and the invoicing method by the lawyer. Some lawyers work with a fixed price agreement, while others invoice on the basis of subsequent calculation. If in doubt, you can always be informed in advance about the expected costs and request a cost estimate.
Freedom of choice of lawyer and its importance in insurance disputes
In the Netherlands you have the right to free choice of lawyer. This means that you decide yourself which lawyer you engage, also in insurance disputes. This is important because it allows you to choose a lawyer who specializes in insurance law and has experience with similar cases. A specialized insurance law lawyer can better advise you on your rights and determine the best strategy.
Insurers sometimes try to appoint a lawyer or express a preference, but you are not obliged to agree to this. By choosing a lawyer yourself, you increase the chance of a successful outcome and prevent possible conflicts of interest.
Funded legal aid (toevoeging): when are you eligible?
An important option to limit the costs of a lawyer is applying for toevoeging, also known as funded legal aid. This means that the government (partly) covers the costs, depending on your income and assets. You then only pay a personal contribution and possibly a small contribution per hearing.
To be eligible for a toevoeging you must submit an application to the Legal Aid Board (Raad voor Rechtsbijstand). This assesses whether you meet the conditions, such as the financial means and the nature of the dispute. In insurance disputes, the chance of success and the complexity of the case are often considered.
More information about toevoeging can be found on wetten.overheid.nl.
Cost calculation and free legal aid schemes in insurance disputes
Many people wonder whether a lawyer also works on the basis of a free legal aid scheme. In the Netherlands, as of January 1, 2014, it is legally prohibited for lawyers to work entirely free of charge. This means that lawyers may not work without risk and always charge costs, even if the case is lost.
However, there are lawyers who offer a combination, for example a lower hourly rate in combination with a success fee. This must always be made transparent in a written agreement. Always ask your lawyer in advance for a clear quotation, in which the costs and any additional arrangements are included.
The role of the Kifid in insurance disputes and costs
When you have a dispute with your insurer, you can in many cases also go to the Financial Services Complaints Institute (Kifid). The Kifid handles complaints about financial institutions, including insurers, and offers an accessible and cost-effective way to resolve conflicts.
Engaging the Kifid is often cheaper than a lawyer, and you do not need to engage a lawyer to file a complaint. However, should you start a procedure at the Kifid and want legal advice, a lawyer can support you in drafting your complaint and conducting the procedure. This can entail additional costs.
Do you want to know how you can file a complaint with the Kifid? Then read our extensive guide filing a complaint with the Kifid.
Lawyer costs in an insurance dispute: how can you limit them?
The lawyer costs in an insurance dispute can run high, but there are several ways to limit these costs. First, you can try to resolve the dispute at an early stage out of court, for example by starting an objection procedure or entering into a discussion with the insurer. This is often cheaper than a court procedure.
In addition, it is wise to investigate whether you are entitled to a toevoeging, so that you can get funded legal aid. You can also have coverage for the costs of the lawyer via a legal expenses insurance. Please note that not all legal expenses insurances offer coverage for all types of insurance disputes. In case of refusal of your legal expenses insurance you can also seek legal help, as described in our blog Legal expenses insurance refused: what can you do?
Finally, it is important to make clear agreements about the costs with your lawyer in advance and regularly discuss the progress and hours made. This way you prevent surprises afterwards.
When may an insurer refuse the payout and what does objecting cost?
An insurer may refuse a payout if there is, for example, deception, non-compliance with the policy conditions or unclarity about the damage. It is important to know when a refusal is lawful and when you can object.
Objecting to a rejection by an insurer can often be done without major costs, especially if you do this yourself or with limited legal support. When you engage a lawyer to object or start a procedure, you will have to take into account the costs as described above.
More information about the grounds for refusal you read in our blog When may an insurer refuse to pay out? and about objecting in Objection against insurer: what can you do in case of a rejection?
What can you do in case of a rejection of damage by your insurer?
If your insurer rejects your damage claim, it is wise to first check whether the rejection is justified. Analyze the policy conditions and ask for a written motivation from the insurer. If you do not agree with the rejection, you can object and possibly file a complaint with the Kifid.
Should the dispute not be resolved, a lawyer specialized in insurance law can help you to enforce your rights and possibly start a procedure. This obviously has consequences for the lawyer costs in an insurance dispute, but can also lead to a court ruling that is in your favor.
Read more about this topic in our blog Rejection of damage by insurer – what can you do?
Costs of an external lawyer and legal standards in insurance disputes
Legal framework and policy conditions under the Wft
In a dispute about an insurance claim, discussion regularly arises about the reimbursement of lawyer costs and the scope of the coverage. Based on the Financial Supervision Act (Wft) and the Civil Code, insurers are obliged to use clear and transparent policy conditions in which the coverage for legal assistance is explicitly recorded. If an insured person has a legal expenses insurance, specific contractual conditions and often statutory rules regarding the free choice of lawyer in judicial or administrative procedures apply. It is essential for insured persons to check in advance whether the policy applies a maximum amount, a deductible or specific limitations for the deployment of external legal service providers outside the insurer’s own organization.
Kifid jurisprudence on extrajudicial lawyer costs
The Disputes Committee of the Financial Services Complaints Institute (Kifid) frequently handles cases in which insured persons claim a full or partial reimbursement of extrajudicial lawyer costs that were incurred before an official procedure or complaint procedure was started. From binding rulings of the Kifid it follows that reasonable costs of an external lawyer can be designated as necessary costs if the insurer culpably falls short in the fulfillment of its obligations, or when the factual or legal complexity of the policy dispute justifies the engagement of a specialized lawyer. However, this right to reimbursement is not unlimited and is usually subject to the maximum rates included in the policy and the double reasonableness of article 6:96 of the Civil Code.
Proportionality and necessity of external legal assistance
Both the jurisprudence of the Kifid and judgments of the civil court (Rechtspraak.nl) emphasize that the insured or their representative must be able to unambiguously demonstrate the necessity of external legal assistance. If the insurer offers an adequate alternative in the form of internal legal employees who can represent the interests of the insured in an independent and expert manner, a refusal to make use of this internal offer can have consequences for the reimbursement of external lawyer costs. Since the legal assessment of cost claims strongly depends on the specific policy conditions, the communication between parties and the nature of the insurance dispute, a careful, individual analysis of the damage file is required at all times.
For the current principles you can consult the statutory regulation on wetten.overheid.nl.
Frequently asked questions
What are the average costs of a lawyer in an insurance dispute?
The costs vary strongly, but on average you can take into account an hourly rate between €150 and €300. The total costs depend on the complexity of the case and the required time. With a toevoeging the costs can turn out considerably lower.
Can I engage a lawyer if my legal expenses insurance is refused?
Yes, you can always engage a lawyer yourself. Also in situations where a legal expenses insurance is refused, you can seek legal help. Sometimes it is possible to apply for funded legal aid. Read more about your options in our blog Legal expenses insurance refused: what can you do?
Do I always have to engage a lawyer in an insurance dispute?
No, not always. Many disputes can be resolved by objecting or filing a complaint with the Kifid. A lawyer can however be of added value in complex cases or if a court procedure is necessary.
Read also
- Rejection of damage by insurer – what can you do?
- Objection against insurer: what can you do in case of a rejection?
- Filing a complaint with the Kifid – your rights, step-by-step plan and tips
Need help?
Do you have an insurance dispute and do you want clarity about the lawyer costs in an insurance dispute or legal support? At Arslan & Arslan Advocaten we are ready for you. Contact us for a free first consultation and discuss your situation with our specialized lawyers.