Dispute type
Insolvency Insurance
Risk transfer that may be arranged around the cost and capital profile of insolvency.
- A judgment or award won
- A judgment against you
- Funder capital deployedConsidered
- Law firm fees and WIP
- Security for costsConsidered
- The opponent's costsConsidered
- DisbursementsConsidered
- Own legal costs
Illustrative. The exposures a dispute can put on a balance sheet. What a policy responds to is set by its wording.
Can insolvency be insured?
Office-holder claims are a long-standing use of ATE: cover for adverse costs and disbursements, often with a premium payable only on success, lets administrators and liquidators pursue claims without putting estate assets at risk, and can answer security for costs applications.
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Key points
- Defendants frequently seek security against insolvent claimants.
- Creditor support and assignment options shape the structure.
- Directors' assets or D&O cover affect recoverability.
The risk profile
Office-holder claims — against directors, auditors or counterparties — must be weighed against the risk of depleting the estate.
Defendants frequently seek security for costs.
Which structures apply
- ATE with deferred, contingent premiums
- Security for costs cover
- Assignment of claims to funders with capital protection
Illustrative scenario
A liquidator brings a £4m wrongful trading claim. ATE covers adverse costs and disbursements, and the liquidator uses the policy to answer the directors' security application.
Figures are invented to show the mechanics. They describe no real client, matter or outcome.
Underwriting considerations
Evidence of the company's position at the relevant dates, directors' assets or D&O cover, and creditor support.
Frequently asked
What claims do insolvency practitioners typically insure?
Claims against former directors, preference and transaction-at-undervalue claims, and claims against professional advisers.
Who pays the ATE premium in an insolvency claim?
Often no one until the case succeeds: premiums are frequently deferred and contingent, payable from recoveries.
Can a liquidator get ATE insurance?
Yes. Office-holder claims are a long-standing use of ATE, often with premiums payable only on success.
Can ATE be used as security against an insolvent claimant?
Often, with appropriate wording such as an anti-avoidance endorsement, which addresses the court's main concerns.
What if the directors have no assets?
Recoverability is central to underwriting; directors' own assets or any D&O insurance will be considered.
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.