The moment you really discover what your legal protection insurance is worth is rarely when you sign. It is the day the insurer replies that the case has no prospect of success, or that it would rather hand it to its own in-house lawyers than to the lawyer you had in mind.
For those two precise moments, Swiss insurance supervision law lays down rules that every contract must contain. They are set out in the federal law on the supervision of insurance companies (VAG/LSA) and its ordinance (AVO/OS), and they apply whatever the general terms and conditions say.
What exactly you are buying
The ordinance defines the contract in one sentence: in return for a premium, the insurer takes on the risk of having to bear costs arising from legal matters, or of providing services in such matters. In other words, it may pay a lawyer, but it may also handle the case itself with its own in-house lawyers.
This cover must be the subject of a separate contract, or of a separate section within a single contract, stating what it covers and the corresponding premium. What is covered, which areas are excluded, any waiting period and the sum insured are therefore to be found in that section, and nowhere else.
Why the law keeps cases apart from the insurer
An insurer that sells legal protection alongside other insurance can end up on both sides of the same dispute. Imagine a disagreement with the household contents insurance of the same company. The law resolves this conflict of interest in one of two ways.
Either the insurer entrusts the handling of legal protection claims to a legally separate company, whose staff may not work for it in its other lines of business. Or it grants the insured person the right to entrust their case, as soon as they can call on the insurer to act, to an independent lawyer of their choice. In that second case, it must inform them immediately after the claim is reported, by a letter whose delivery can be proved.
Where a separate company handles the cases, the ordinance forbids the insurer from giving it instructions that would harm the insured person in a conflict of interest, and forbids the claims company from passing on to the insurer information that would do so.
Free choice of lawyer: two situations, no more
Every contract must provide that the insured person may freely choose a representative with the required qualifications. But only in two cases: where a representative has to be brought in because of court or administrative proceedings, and where there is a conflict of interest.
Outside those two situations, for example while negotiating with a landlord before any lawsuit, the law does not guarantee that choice, and the contract decides.
The contract may allow the insurer to reject the lawyer chosen. In that case, the insured person has the right to propose three others, one of whom must be accepted. And whenever a conflict of interest arises, the insurer must inform them of their right to choose.
In its 2024 annual report, the Private Insurance Ombudsman describes a case in which an insurer had capped the fees of a freely chosen lawyer by relying on a decision of the public prosecutor. The Ombudsman found this contrary to the contract and recommends that insurers accept justified fee notes, within the limits of the usual rates in the region, unless explicitly agreed otherwise.
When the insurer considers the case lost from the start
This is the refusal the law regulates most precisely. An insurer that refuses to cover a step it considers to have no prospect of success must give its reasons in writing, without delay, and inform the insured person that a procedure exists for settling the disagreement.
That procedure must be set out in the contract and offer guarantees of objectivity comparable to those of arbitration. If the contract provides for none, or if the insurer fails to inform the insured person of it when refusing, the need for cover is deemed to be accepted: the refusal falls away.
That leaves the case where the insured person goes ahead anyway and litigates at their own expense. If they obtain a judgment more favourable than the solution the insurer had proposed to them in writing, the insurer pays the resulting costs, up to the maximum sum insured. The risk of having misjudged the prospects of success then falls on the insurer.
Two final safeguards
A clause requiring you to release your lawyer from professional secrecy towards the insurer does not apply in a conflict of interest, if the information requested could harm you. And the insurer may not require you to promise it a share of any gain or saving it obtains for you.
Before taking out cover, or reporting a dispute
- Find out who handles claims: the insurer itself, or a separate company named in the contract.
- Read the clause on choice of lawyer, and check that it covers at least the two cases provided for by law.
- Look for the procedure for disagreements over prospects of success: if there is none, that works in your favour.
- Check the areas covered and excluded, the waiting period and the sum insured in the legal protection section.
- Report the dispute early and in writing: a refusal on formal grounds is harder to challenge after the event.