I'm sure more legal-minded people will correct/confirm this, but legal cover is a sort of top-up to your car cover that is meant to pay out for costs incurred which are not covered by the car policy if you're making a claim, like travel expenses and so on (or say your car is smashed up and you had your laptop in there and it is damaged as a result of the crash). Insurers always 'tick the box' for you - I always remove it. (You might be able to use it to claim back your excess though. Can someone tell me if that's right?)

Basically it just covers the costs of anything you might need which arent covered under your motor insurance. Such as if you're in an accident and you're injured, the legal cover will pay for your legal advice etc. Without it they'll just write off the car and be done with it, as obviously you're insuring the car, not specifically yourself. Its worth having as in moderately lengthy cases as you dont get much change from 100 grand from solicitors and that is the typical value you're covered to.

If both you and your wifes car is under the same car insurance policy (say a multicar policy with Admiral for instance) then yes you pay once to cover both. Most home insurance policies wont cover legal bills for anything which happens outside of the home, obviously. So no you cant pay legal protection to ensure your car and expect it to cover the other two, its to cover anything not covered under the motor insurance which occurs through use of that car.