Here at Mybiz 24/7, we’re constantly on the look out for new insurance products – hey, everyone has their weakness..! But in all honesty, we figure that there’s probably an insurance product for everyone. Which is why we weren’t surprised when one of our contacts abroad mentioned Divorce Insurance. Seriously!

So what is it? Basically it’s a clever way for lawyers to get paid when you can’t afford their legal bills. Magic. Essentially, it allows you to use an insurance policy as  guarantee when taking out a loan to fund your defense.

How does it work? Once a person figures out that they will need a lawyer (say during an expensive property settlement case), they will need to make sure they have sufficient funds to hire a lawyer.

However, the unfortunate person may not be able to fund the costs of a lawyer and will need to borrow some money. In borrowing money though, the financier will require some form of security – enter the insurance company.

The insurance company receives advice from the lawyer as to the likely outcomes of the settlement and if they are willing to take on the risk will make the loan repayments on your behalf if you become bankrupt and are no longer able to pay. Of course, it is likely to favour those more likely to receive a payout as otherwise there would be no incentive for the insurance company to take on this risk. In addition, there may be restrictions (i.e. limits) on the number repayments or amounts payable under the policy and indeed, we would suspect that you would probably need to consult a lawyer just to understand the policy wording itself!

Is it available in Australia? Speak to your broker or legal professional – these types of products are highly specialised and not as widely available as say, property insurance or public liability. It is also likely that the insurance company will be based overseas, for example in London, Switzerland or Bermuda. Business and pleasure? Probably not! Let’s hope you don’t need it anyway!