If you have no existing insurance cover that can help fund the dispute, or you need additional cover, it may be possible to buy ‘after-the-event insurance’ (“ATE insurance”). This is insurance that can be taken out after the dispute has arisen.
A summary of the benefits of after-the-event insurance:
- it can be purchased after the dispute has arisen;
- the premium can in some cases be deferred until the conclusion of your case;
- the premium can in some cases be self-insuring if you lose;
- it is a method of buying off the risk of payment of costs to your opponent and your own disbursements in return for a payment of a premium by you; and
- it can be used alongside other funding arrangements to reduce your exposure for all types of litigation cost.
After-the-event insurance is a type of legal expenses insurance policy that provides cover for the legal costs incurred in the pursuit or defence of litigation and arbitration.
It is distinct from pre-purchased ‘before-the-event’ (“BTE”) insurance policies which are commonly provided in conjunction with, for example, business or house insurance, and which have a strict incident reporting deadline and a requirement that the incident post-dates inception of the policy.
Reducing exposure with after-the-event insurance
After-the-event insurance can be purchased for nearly all areas of litigation, with the exception of matrimonial or criminal law, to cover some of the expenses of litigation, such as the risk of paying your opponent’s legal fees and disbursements, plus your own disbursements should you be unsuccessful in the litigation.
In this way, after-the-event insurance covers any exposure not covered by a conditional fee agreement. Own costs cover can be obtained, but this is less common.
Generally, the premium paid for an after-the-event insurance policy is not recoverable from your opponent if the litigation is successful (there are exceptions for some personal injury, clinical negligence, and defamation disputes). However, payment of the premium for an After-the-event insurance policy is often deferred until the conclusion of the litigation, and the premium is often self-insured, which means that it is not payable if the litigation is unsuccessful.
After-the-event insurance is generally available for:
- claimants and defendants;
- claims for more than £10,000, provided the premium is proportionate to the value of thclaim;
- litigation in the English Courts and domestic arbitrations and tribunal work. It cannot cover matters in other jurisdictions because of regulatory or licence requirements.
After-the-event insurance is unlikely to be provided where the case involves novel legal issues. If it is offered, the premiums are likely to be very high, given the additional risk to the insurer.
Whilst we are not insurance brokers, we can help you make an application to an insurance broker and/or after-the-event insurer and advise you upon the suitability of the terms of any insurance policy for the dispute. We cannot guarantee that an application for insurance will be successful, that the extent of the cover available will be sufficient to cover all of the legal costs, or that payment for the premium will be deferred and/or self-insuring.
In order to consider whether insurance may be offered, an insurer will usually require a detailed case summary and the opinion of a barrister that your prospects of success are greater than 60%.
You will need to pay for our services in preparing the application and obtaining an opinion from a barrister. The costs of doing so will not be recoverable from your opponent.
If an after-the-event insurance policy is purchased, it is important to comply with the terms of the policy which will include providing reports to the insurer on the progress of the case; any offers that are made during the litigation and the prospects of the litigation.