Hands up, I can’t drive. Well, actually I think I’m a brilliant driver but I failed my driving test by driving through a red light 15 years ago, and I haven’t driven since (the instructor totally overreacted! ha)

Well anyway, I’ve been chatting with Lee from Free Motor Legal on Twitter for ages now and we’ve become friendly. He’s been in the car insurance industry for years and reckons the company he started can save you money, so had to get him to write about his company.

I hope you enjoy his post (I think its super interesting).

How my own money saving idea became the new trick to save UK motorists £900 Million a year

For years I worked for both major insurers and then law firms dealing with road accident claims and after a while, I noticed a pattern regarding Motor Legal Protection/ Legal Expenses Policies, namely they were a bit of a sham!

These policies get sold to you when you take out a motor insurance policy as an additional layer of protection, to cover you for legal fees when you need to claw back losses and expenses you may incur after an accident that was not your fault, such as lost earnings, treatment costs, car hire charges or personal injury compensation. All sounds pretty fine, doesn’t it?

Usually, these policies retail for around £30 per annum, per vehicle you have insured. So a household with several cars or motorcycles often is individually paying for these policies several times over.

The fact is that behind the scenes, these policies cost your insurer, broker or price comparison site about 50p each, yet are sold for around £30 each. A nice juicy mark up of 6000%! Not bad eh?

The reality is that these polices have a net cost to the vendor of 50p because the actual underwriters of the policies never have to pay out any legal fees. The reason being that all of these policies stipulate that the legal expenses insurer chooses the law firm that will act for you. The panel solicitors have all agreed that they will not seek any costs from the legal expenses policy if the claim does not succeed. So if they don’t win your case, the lawyers have to just absorb any fees and expenses incurred. If they win your case, their fees get paid by your opponent’s insurers.

Working in the industry I saw that these policies were just being used as claims capture mechanisms so that customers were pushed in the direction of preferred law firms for the payment of referral fees back to the insurer. So not only did they make a healthy profit from selling you the legal protection policy, they made more money by selling your claim to injury lawyers and hire companies. Essentially it did not matter to the lawyer if you had a legal expenses policy or not. They were only getting paid if they won your claim.

This is where I had the eureka moment as I could see that I could make the same arrangements for motorists by giving away membership free of charge to a club and then retaining the services of lawyers who could act under a no win no fee agreement and importantly not take any deductions from the client’s settlement.

I set up Free Motor Legal in 2012 and have just enjoyed steady organic growth as I had no real budget to market myself with compared to the insurance industry paying millions for Hollywood actors to star in glitzy TV commercials or giving away stuffed toys.

When doing some recent calculations as to how many people could benefit from having a free alternative to paying £30 a year for motor legal cover, the figures were simply staggering. There over 30 million registered cars on the roads in the UK (this obviously excludes vans and motorcycles). If each of the 30million car users were charged £30 per annum for motor legal cover, this amounts to £900 Million spend each year!

When I started Free Motor Legal I wanted membership to be free, but better still, membership to last for life, not just one year. So the savings happen each year and our members do not need to renew with us each year and it does not matter how many cars or vans or motorcycles they own, they only need to join once and the savings just mount year on year from there.

I’m pretty proud of the savings I have created for Britain’s motorists from a simple idea conceived when working in an industry and I hope that more and more people discover that they do not need to be bound to insurers when they make their compulsory purchase of insurance cover for their vehicles for all aspects of cover.

Lee Jones is the founder and managing director of Free Motor Legal Ltd, the free alternative to motor legal protection.