Insurance solution
After-the-Event Insurance
Cover taken out after a dispute has arisen, responding to adverse costs and, where agreed, own-side disbursements.
- A judgment or award won
- A judgment against you
- Funder capital deployed
- Law firm fees and WIP
- Security for costs
- The opponent's costsThis cover
- DisbursementsThis cover
- 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 After-the-Event Insurance?
After-the-Event Insurance is a form of litigation risk transfer that may be arranged around opponent's costs and own disbursements. Cover taken out after a dispute has arisen, responding to adverse costs and, where agreed, own-side disbursements. Terms, where available, are set case by case through underwriting.
On this page5 min read
Schedule · specimen
After-the-Event 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
- Opponent's costs and own disbursements, 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
Claimants and, less often, defendants in substantial commercial disputes who face a costs exposure they do not want on their balance sheet: corporates, insolvency office-holders pursuing claims for an estate, funded claimants, and claimants in group or collective proceedings.
Clause 2
Insuring clause
What risks can be protected
Principally the other side's costs if the case is lost (adverse costs).
Many policies also cover the insured's own disbursements — expert fees, counsel and court fees — and some extend to own solicitors' fees where these are not otherwise at risk. Cover can also be used to satisfy an order for security for costs.
Clause 3
Operation of cover
How it works
The policy is bought after the dispute has arisen.
It sets a limit of indemnity, usually sized to the costs budget through trial, and responds if the insured is ordered to pay costs or loses on the defined terms. The insured must keep the insurer informed, follow reasonable legal advice and consult on settlement offers. If the case succeeds, the policy does not pay; the premium is then usually due.
Clause 4
Underwriting
Underwriting factors
Underwriters start with the merits, usually through counsel's written opinion, and read it for weaknesses rather than conclusions.
They then test quantum against the evidence, look at the costs budget in proportion to a realistic recovery, and ask whether the opponent can pay if you win. The legal team's experience of comparable disputes, the stage reached and any settlement history all affect appetite and terms.
Clause 5
Proposal documents
Information required
- (a)A short case summary;
- (b)Counsel's merits opinion with a percentage view where available;
- (c)The pleadings or letters of claim and response;
- (d)A phased costs budget for both sides through trial;
- (e)The funding and fee arrangements already in place; and
- (f)Anything known about the opponent's assets.
Early presentations can proceed on less, but a complete pack usually produces firmer terms.
Clause 6
Limit, premium and staging
Potential structure
Premiums are often deferred and contingent — payable only if the case succeeds, and sometimes only from the proceeds.
Cover is commonly staged, so the limit and premium step up at points such as close of pleadings, disclosure and trial. Some policies include a self-insured element or a retention, and some pair with a deed of indemnity for security purposes.
Clause 7
Exclusions
What it does not cover
Anything above the policy limit, including spend beyond the budget the limit was sized to. Costs incurred in breach of the policy conditions, such as failing to report or ignoring counsel's advice. Your own solicitors' fees, unless the policy expressly includes them. Damages or other liabilities that are not costs. And, if you win, the policy pays nothing — the premium then usually becomes due.
Clause 8
Alternatives
Alternatives
- (a)Paying security or costs from the balance sheet;
- (b)Third-party funding with the funder assuming adverse costs;
- (c)A bank guarantee or surety bond for security; and
- (d)A portfolio arrangement where the claimant has several matters.
Clause 9
Territory
Jurisdiction notes
Adverse costs cover matters most where costs follow the event, as in England and Wales, Australia, Singapore and Hong Kong.
In England and Wales ATE premiums have generally not been recoverable from the losing side since April 2013, so the premium structure is a commercial point for the insured. Where each side bears its own costs, as in the United States, the adverse layer is thin and other instruments usually matter more.
Specimen for explanation only. Terms, limits and exclusions are set by underwriting on each matter and by the wording issued.
In this section
- ATE Insurance CostHow premiums are set, how they are paid, and what changes the price.
- Is ATE Insurance Worth It?When ATE earns its cost, when it doesn't, and what to check first.
- Commercial ATE InsuranceCosts risk on substantial commercial claims
- Adverse Costs InsuranceLiability for the opponent's costs
- Own-Side Costs InsuranceYour own legal costs
- Disbursement InsuranceExperts, counsel and court fees
Ways to handle adverse costs risk
| Option | Cash needed now | Adverse costs covered | Upside given up |
|---|---|---|---|
| Carry the risk yourself | None until an order is made | No | None |
| ATE, deferred contingent premium | Usually none | Yes, up to the limit | The premium, only if you win |
| ATE, premium paid up front | The premium | Yes, up to the limit | None beyond the premium |
| Funder's adverse costs indemnity | None | Depends on the funding terms | A share of recoveries |
General comparison. Terms depend on the case and the policy or funding agreement.
Frequently asked
Are ATE insurance premiums recoverable from the losing side?
In England and Wales, generally not for policies taken out on or after 1 April 2013, when the Legal Aid, Sentencing and Punishment of Offenders Act 2012 ended recoverability for most claims. Limited exceptions remain. The premium is therefore usually a cost to the insured, which is one reason deferred and contingent premiums are common.
Who pays for ATE insurance?
The insured — usually the claimant — though a funder or law firm sometimes pays or arranges it. Premiums are often deferred and payable only if the case succeeds, commonly from the damages recovered.
How much does ATE insurance cost?
There is no rate card. The premium reflects the size of the limit, the prospects of success, the stage of the case and whether payment is deferred or contingent. Contingent premiums payable only on success are usually higher than premiums paid up front. See our guide to what litigation insurance costs.
Can ATE insurance be used as security for costs?
Often, if the policy gives the defendant real protection — typically through an anti-avoidance endorsement or a deed of indemnity — and the insurer is of adequate standing. The court decides on the facts of each application.
What is the difference between ATE and before-the-event (BTE) insurance?
BTE legal expenses insurance is bought before a dispute arises, often as an add-on to another policy. ATE is bought after the dispute has arisen and is underwritten on that specific case, so it can be arranged for a claim that already exists.
Can ATE insurance be bought after a claim has been issued?
Often, yes. Insurers will usually consider a case at any stage, although the stage reached, the costs already incurred and the prospects of success all affect whether cover is offered and on what terms.
Does ATE insurance cover the consequences of rejecting a settlement offer?
Only if the policy says so. Whether costs consequences of failing to beat an offer, such as under CPR Part 36, are covered depends entirely on the wording, so ask about it before the policy is placed.
Does ATE insurance cover my own legal fees?
Not usually. Cover is typically for the other side's costs and, where agreed, the insured's own disbursements. Some policies extend to part of own legal fees where they are expressly included.
Is After-the-Event 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.
Where to go next
Related products
Jurisdictions