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Adverse Judgment Insurance
Cover capping the downside of an adverse determination for a defendant.
- A judgment or award won
- A judgment against youThis cover
- Funder capital deployed
- Law firm fees and WIP
- Security for costs
- The opponent's costs
- Disbursements
- Own legal costs
Illustrative. The exposures a dispute can put on a balance sheet. What a policy responds to is set by its wording.
What is Adverse Judgment Insurance?
Adverse Judgment Insurance is a form of litigation risk transfer that may be arranged around exposure to a judgment against you. Cover capping the downside of an adverse determination for a defendant. Terms, where available, are set case by case through underwriting.
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Schedule · specimen
Adverse Judgment Insurance
Not a policy. A specimen to show how this cover is structured. Cover exists only when a policy is issued, on its own wording.
- Terms
- Terms, where available, are set case by case through underwriting.
- Protects
- Exposure to a judgment against you, depending on policy terms.
- Terms
- Limit, premium and conditions are set by underwriting on the specific risk.
Clause 1
The insured
Who it is for
Defendants — and their owners, lenders or acquirers — facing a claim whose downside is too large or uncertain to carry.
Clause 2
Insuring clause
What risks can be protected
Damages and costs above an agreed attachment point if the case is lost, up to a limit.
Clause 3
Operation of cover
How it works
The insurer takes a view on the defendant's liability and quantum.
The policy responds to a judgment or approved settlement above the attachment, converting an open-ended exposure into a known one.
Clause 4
Underwriting
Underwriting factors
Contingent risk is priced on a legal question rather than a whole case.
Underwriters focus on the precise issue at risk (an appeal point, a liability that may crystallise, a judgment that may be reversed), the quality of the legal analysis, the size of the exposure and the time until it resolves. Independent opinions from appellate or specialist counsel are often central.
Clause 5
Proposal documents
Information required
- (a)The judgment, award or claim documents;
- (b)The grounds of appeal or the alleged liability;
- (c)Independent counsel's analysis of the specific risk;
- (d)The amount at stake and how it would be paid; and
- (e)The transaction or financing context if cover is needed to support one.
Clause 6
Limit, premium and staging
Potential structure
- (a)An attachment set at the level the defendant is prepared to bear;
- (b)A limit above it;
- (c)Defence costs sometimes included; and
- (d)Insurer consent rights over settlement.
Clause 7
Exclusions
What it does not cover
The first layer of loss below the attachment point, which the defendant keeps; liabilities outside the identified claim; losses above the limit; and, unless included, defence costs.
Clause 8
Alternatives
Alternatives
- (a)Reserving and self-insuring;
- (b)Settling; and
- (c)Transferring the liability entirely through a buyout.
Clause 9
Territory
Jurisdiction notes
Contingent cover is most developed around US and English law disputes, but it follows the legal risk rather than the insured's location.
Appellate practice, the standard of review and how long an appeal takes in the relevant court all shape terms.
Specimen for explanation only. Terms, limits and exclusions are set by underwriting on each matter and by the wording issued.
Frequently asked
How does adverse judgment insurance work?
The defendant keeps an agreed first layer of loss (the attachment point). If a judgment or approved settlement exceeds it, the insurer pays the excess up to the limit, turning an open-ended exposure into a defined one.
Does the insurer control the defence?
Usually not outright, but policies commonly give the insurer consultation and consent rights over key decisions, particularly settlement.
Is Adverse Judgment Insurance available for my dispute?
Availability depends on the merits, the quantum, the costs profile and the counterparty. Every risk is assessed individually and no cover exists until a policy is issued.
Does this quote a price?
No. Pricing is a function of the specific risk and is never quoted in the abstract. Nothing on this page indicates the cost or availability of cover.
Can it be combined with litigation funding?
Frequently, yes. Funding supplies capital; insurance defines the downside. The two are often structured together.
General information only. This page is not legal, financial, investment or insurance advice. Any insurance is subject to underwriting and to the terms of the policy wording issued.