Insurer offers legal insurance directly to consumers for $16.25 a month
ARAG website.
A second insurance company has decided to offer prepaid legal insurance directly to consumers.
The insurer, ARAG, offers two plans for consumers, one for $16.25 a month and another that covers more legal matters for $24.50 a month, reports LawSites by Robert Ambrogi. The deductible is $250 per matter.
The basic plan covers matters such as wills and trusts, defense of civil matters, consumer issues, adoptions and guardianships, landlord/tenant matters, real estate, tax audits and collections, juvenile crime and misdemeanors. In addition, purchasers of the insurance can save 25 percent off a lawyer’s normal rates in matters such as divorce and bankruptcies. Coverage is not available in Alaska.
The more expensive plan also covers financial counseling, identity theft protection and eldercare counseling.
ARAG already offers legal insurance that is sponsored by employers. It joins another company, LegalShield, that also sells legal insurance directly to consumers. According to LawSites, LegalShield covers fewer legal matters than ARAG.
Is legal insurance a good value? It depends, according to LawSites. A consumer who uses the insurance just once in a year, to get a will, would pay $195 for the insurance plus the $250 deductible. That makes the will cost $445, an amount that LawSites suggests is more costly than a basic will offered by some lawyers.
But the price would be a bargain in more complicated matters, or when a consumer uses the insurance more than once in a year, LawSites concludes.
The insurance can also be beneficial to lawyers who participate in the legal network, according to Miami lawyer Javier Baños Machado, a network lawyer who is a member of ARAG’s advisory council. He told LawSites that ARAG pays him about 60 percent of what he would normally charge, but he saves the cost of obtaining the clients. He also gets repeat business and referrals from ARAG-referred clients.
Machado and his wife, who is also a network attorney, bring in about $60,000 a year from ARAG work.
