Legal insurance, horizontal unbundling and access to justice

Research from the Netheralnds (van Velthoven and Klein Haarhuis, 2009) showed that people who have insurance against legal expenses are more likely to report  experiences with legal problems. Several explanations are possible here. First, those who are more likely to get into legal trouble might be more willing to purchase an insurance policy. Alternatively, one might think that people who are insured will have less hesitations to proceed to solve their legal problems simply because they face less uncertainties in terms of costs. Or simply those who are insured have more motivations to prove to themselves and to others that the investment in insurance policy was worth it.

Eirther way, legal expenses insurance is a smart way to make justice more certain and accessible. It is also one of the areas with huge potential for innovation. Specialisation is one area to keep an eye on. In a way we can say that legal insurance providers already experiment with horizontal unbundling of legal services. General legal expenses insurance might be difficult to understand for many people but risks in specific domains might be significantly more tangible and most of all – quantifiable. I recently stumbled into an insurance ad which is a great example of a product targeted towards a common cluster of legal problems – disputes arising out of vehicle ownership. Indeed, in many countries the third-party liability insurance is compulsory. But car owners frequently need legal advice and sometimes representation for a myriad of legal problems which are not accidents. The ad lists some situations which are not at all hypothetical:

“Those unexpected twists could be a driver’s license issue, problems with the sale or purchase of a vehicle, an accident-related benefits dispute and more.

What if:

• You’re faced with a traffic ticket that you believe was wrongly assessed?
• The replacement value of your vehicle is quoted far below what you believe it’s worth@
• Your local repair shop does a terrible job and you’re stuck with a bill and a vehicle that still isn’t working properly?”

Which other areas of law can we deem as candidates for unbundling? Consumer and employment disputes, family matters? In developing countries one might thing of problems related to land tenure and food security.