Why direct claims can no longer be handled the way they used to be: the key role of legal defence insurance

The way claims are handled has changed. Until recently, when a client suffered a loss and a claim had to be directed against the other party’s insurer, it was common for the broker to help manage that claim directly, without involving the client’s own legal defence insurance. It was a useful, hands-on approach focused on resolving the problem as quickly as possible.

However, with the entry into force of Organic Law 1/2025 on measures to improve the efficiency of the Public Justice Service, the landscape is different. The law promotes Adequate Means of Dispute Resolution, known by their Spanish acronym MASC, and requires that, as a general rule, before taking a civil or commercial dispute to court, a prior negotiation attempt must have been made, as set out in the Official State Gazette.

This means that many claims that were previously handled as a simple communication to the opposing insurer now need to be prepared with a more complete legal perspective. It is no longer enough to make a claim: the claim must be made correctly, with documented evidence of the negotiation attempt, verified communications and the assurance that what was negotiated matches what could, if necessary, be claimed in court.

What is legal defence insurance and what is it for?

Legal defence insurance is a coverage that gives the insured access to specialist professionals to manage a claim, properly document communications, assess the best negotiation route and prepare the case in the event that court proceedings become necessary. It is not only about having coverage for a trial: it is about having expert support before reaching that point, at exactly the stage that the law has now made critical.

From claim to negotiation

That is precisely the most significant change: we have moved from an informal or purely administrative claim to a prior negotiation phase with procedural consequences.

MASC can take different forms. This table summarises the main modalities set out in the legislation:

In all cases, the aim is to encourage an out-of-court settlement and reduce litigation. However, this new requirement also introduces an added responsibility. If the prior claim is not handled correctly, it can create problems when the matter eventually reaches court. For example, it may be questioned whether the pre-litigation requirement set out in the law has been met, whether there is consistency between what was negotiated and what is being claimed in court, or whether the prior conduct was sufficient to protect the insured’s interests.

The risk of continuing to act as before

This is where brokers need to be especially careful. When handling a direct claim against the opposing insurer, the intention is to help the client — but if we get involved without adapting our approach to today’s requirements, we could actually cause them harm.

That harm can materialise in two ways. The first is time: a poorly structured claim can delay resolution, require steps to be repeated or make it harder to pursue the matter in court later. The second is costs: if the case reaches court, the way in which the prior negotiation was attempted may be relevant to the assessment of each party’s conduct and the financial consequences of the proceedings.

For this reason, these claims should no longer be treated as routine loss management. They require traceability, legal knowledge and a proper strategy from the very beginning.

Legal defence insurance: more necessary than ever

In this new context, having legal defence insurance is no longer a secondary coverage — it has become a highly recommended tool. This type of insurance gives the insured access to specialist professionals to manage the claim, properly document communications, assess the best negotiation route and prepare the case should court proceedings become necessary.

It also helps to separate roles. The broker maintains their position as a trusted adviser, supports the client and identifies the need for protection, while avoiding taking on a management role that today can have significant legal consequences. The client, in turn, gains confidence: they know their claim is being handled correctly and with greater safeguards.

Legal defence insurance is particularly useful for claims related to motor vehicles, home, commercial premises, residents’ associations, businesses and rental properties. These are everyday situations, often involving moderate amounts, but with enough complexity that an error in the prior phase can seriously complicate the recovery of the loss.

An opportunity to protect clients better

The new regulation should not be seen solely as an obligation. It is also an opportunity to explain to clients that making a claim correctly is just as important as being in the right.

When there is a dispute with an opposing insurer, a neighbour, a residents’ association, a carrier, a supplier or any other third party, the outcome of the claim can depend on how it is framed from the outset. Prior negotiation is now part of the process. And that process is best navigated with specialist support.

For this reason, taking out legal defence insurance is today a particularly sound decision. It is not only about having coverage for a trial. It is about having expert support before reaching that point, at exactly the stage that the law has now made critical.

In short, direct claims are no longer what they used to be. Current regulations demand greater rigour, more evidence and a clearer strategy. And in this new landscape, the best way to protect clients is to offer them a solution that allows them to claim with confidence: good legal defence insurance.

Frequently asked questions about legal defence insurance

1. What is legal defence insurance?

It is a coverage that gives the insured access to specialist professionals to manage a claim, properly document communications, assess the best negotiation route and prepare the case should court proceedings become necessary. It does not only cover the trial itself: it provides expert support before reaching that point.

2. What are MASC and why do they affect claims?

MASC are Adequate Means of Dispute Resolution. Under Organic Law 1/2025, before taking a civil or commercial dispute to court it is necessary to have attempted a prior negotiation. This means that many claims that were previously handled directly now require a more complete legal perspective from the very beginning.

3. In which situations is legal defence insurance most useful?

It is particularly useful for claims related to motor vehicles, home, commercial premises, residents’ associations, businesses and rental properties. These are everyday situations, often involving moderate amounts, but with enough complexity that an error in the prior phase can seriously complicate the recovery of the loss.

4. What risk exists if the prior claim is not handled correctly?

If the prior claim is not handled correctly, problems can arise when the matter reaches court. It may be questioned whether the pre-litigation requirement has been met, whether there is consistency between what was negotiated and what is being claimed in court, or whether the prior conduct was sufficient to protect the insured’s interests. In addition, the way in which the negotiation was attempted may be relevant to the costs of the proceedings.

5. Why should the broker not handle these claims directly?

Because getting involved without adapting to today’s requirements could cause harm to the client. A poorly structured claim can delay resolution, require steps to be repeated or make it harder to pursue the matter in court. Legal defence insurance allows roles to be separated: the broker maintains their position as a trusted adviser and the client gains legal confidence.

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