Section 34 of the Constitution of the Republic of South Africa (No. 108 of 1996) guarantees that "everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum". This is now a fundamental right, but what happens if a person cannot afford legal advice, even if he or she has a strong claim? One solution may be found by way of insurance. Legal expenses insurance has long been recognised in foreign countries such as the United Kingdom and Canada. The United States refers to this kind of insurance as "pre-paid legal services", the purpose of which is to cover a policy holder against the costs of legal action instituted by another person against him/her. There are two categories of legal expenses insurance, namely "before-the-event" and "after-the-event" insurance. "Before-the-event" insurance usually covers a person for potential litigation costs which could be incurred in the future, whereas "after-the-event" insurance provides cover for an event which has already taken place, such as an accident.
In the United Kingdom, cover for legal expenses has increased substantially in recent years. It is mostly sold as an addition to motor or household policies or offered as a collateral benefit to a contract of employment or trade union membership1. These constitute "before-the-event insurance" and entitle the policy holder to the services of a solicitor and sometimes claims management and handling services provided by a separate company. They may also provide an indemnity against the risk of becoming liable to pay the legal costs of the other party2. The UK also has two types of "after-the-event" insurance, namely "conditional fee insurance" and "both sides’ costs insurance" which normally provides cover for the opponent’s costs and solicitors disbursements excluding counsel fees3.
In South Africa the Short-term Insurance Act No. 53 of 1998 ("the Act") appears to provide for legal expenses insurance. The Act includes "liability policy" under its definition for a "short term policy" and defines it as "a contract in terms of which a person, in return for a premium, undertakes to provide policy benefits if an event, contemplated in the contract as a risk relating to the incurring of a liability, otherwise than as part of a policy relating to a risk more specifically contemplated in another definition in this section, occurs; and includes a reinsurance policy of such a policy". This is the sort of liability that may arise from, for example, a member of a profession insuring himself against professional negligence or a delict like negligent driving4. The liability may arise out of a variety of occurrences or result from a particular kind of accident. The Act also provides for a miscellaneous policy for contracts not covered by other definitions. Such a contract is defined in Section 1 of the Act as "a contract in terms of which a person, in return for a premium, undertakes to provide policy benefits if an event, contemplated in the contract as a risk relating to any matter not otherwise defined in this section, occurs; and includes a reinsurance policy in respect of such a policy". This appears to be wide enough to cover legal expenses insurance.
Many insurance companies in South Africa now offer their customers niche legal expenses insurance policies that can be taken out for almost any violation of a person’s rights. These may include civil matters based on written or signed agreements, criminal matters, bail applications, labour matters, mediation and litigation; although cover for litigation is usually limited to a specific amount per annum. The policies provided do not distinguish whether the policy holder is acting as the plaintiff or the defendant in any particular matter, although each insurance company does provide for its own specific exclusions. In addition, such policies will invariably provide for the prospects of success to be considered and approved before litigation can commence (and be covered). Some of the insurance companies also follow the UK example and provide for this type of insurance to be taken out as part of motor vehicle accident or household insurance policies.
In summary, therefore, it is possible to obtain legal expenses insurance in South Africa, which allows for the access to justice envisaged in the Constitution, although the terms and conditions on which any individual policy is based would have to be carefully scrutinised to check in which circumstances it would apply.