The evaluation of chances of success by legal protection insurance companies

When an insured person requests that their legal costs be covered by their legal protection insurance, the insurer may make its intervention subject to certain conditions, particularly the existence of reasonable chances of success.

The assessment of the chances of success cannot be purely subjective: it must be based on a serious and objective analysis of the facts and the law, comparable to that carried out for the granting of free legal aid (ATF 119 II 368).

In other words, and by analogy with the analysis for granting legal aid, the insurer can only refuse its support if the prospects of winning are significantly weaker than the risks of losing. If, on the other hand, the chances and risks are approximately equivalent – or even slightly unfavorable – the dispute cannot be considered devoid of chances of success. Simple uncertainty, a complex legal question, or unfavorable case law are not sufficient to justify a refusal.

The procedure in case of refusal

Article 169 paragraph 2 of the Ordinance on the Supervision of Private Enterprises (OS) describes the procedure to be followed by the insurer in the event of refusal to provide its service for a measure that it considers to be without chances of success. In this case, the insurer must:

• Provide written and immediate reasons for its decision;

• Inform the insured person of the possibility of contesting this decision, particularly through an internal mediation procedure or an independent expert provided for in the contract (Art. 169 para. 1 OS) - this procedure is not exclusive, the insured person retains the right to bring the dispute before the ordinary courts.

In the absence of such a procedure, or if the insurer fails to clearly communicate the avenues of appeal, the coverage is deemed acquired (Art. 169 para. 3 OS).

Furthermore, if the insured person decides nonetheless to initiate proceedings at their own expense and obtains a result more favorable than the solution initially proposed by the insurance, the latter must reimburse the costs of the lawsuit, up to the limit of the insured amount (Art. 169 para. 4 OS).

In practice: a balance to be found

The legal protection insurer acts as a filter: it must avoid funding actions that are clearly lost in advance, without, however, substituting itself for the judge. The threshold of certainty required to refuse coverage is therefore high: the case must appear manifestly doomed to failure, and not merely uncertain.

For insured persons, this means that a refusal is legitimate only if the file is objectively very weak. In the event of disagreement with the insurance's assessment, the insured person may act according to the internal procedure provided by the insurer or, if necessary, take legal action to contest the refusal of coverage.