Legal expenses insurance pays the legal expenses of a legal dispute. Win or lose it pays your legal costs and any legal costs you are ordered to pay to your opponent (but subject to a limit in the policy) but if you lose and are ordered to pay compensation (damages) to your opponent, you have to pay that yourself.
With indemnity insurance, however, the insurance company actually pays the compensation to your opponent so that you don't have to. If there is a court case the insurance company will pay for that as well - essentially because the insurance company will (subject to policy limits) be paying the compensation in the end, it is up to them whether they fight a court case in your name or settle, but they pay for it. An example of indemnity insurance is Public Liability Insurance which may cover, for example, claims against you for injuries caused to visitors by the state of your premises.
Sometimes people have insurance without realising it. For example many house insurance policies provide legal expenses insurance and indemnity insurance - in certain areas of law and subject to certain exclusions, of course. If you are a member of a trade union or professional body you may find that insurance is included in your membership fee.
The above explanation is only an overview and in order to be reasonably concise I have had to leave some details out - details which are likely to affect what the law would say about your own situation. So please do not rely on the above: it is just an indication of possible sources of legal funding and of questions you might want to ask.
This page was lasted updated in March 2017 Disclaimer