Process
How Litigation Insurance Works
From initial outline to placement, and through the life of the matter.
Illustrative. The usual sequence, from first outline of the risk to indicative terms.
How does litigation insurance work?
A matter is reviewed, the exposure is framed into an insurable structure, and the risk is presented to appropriate underwriting markets. Indicative terms are compared on limit, attachment and conditions. Cover incepts only once wording, deeds and conditions precedent are agreed.
On this page2 min read
Key points
- Initial outline, risk framing, market engagement, terms, placement.
- Underwriting turns on merits, quantum, costs, enforceability and counterparty.
- Conditions precedent and reporting obligations run through the case.
- No cover exists before a policy is issued.
The sequence
The dispute and what needs protecting are set out in a short outline.
The risk is reviewed for whether transfer looks realistic. If it does, indicative terms are gathered from the relevant markets, compared on limit, premium and conditions, and the wording is negotiated with the insured's lawyers before cover starts.
What underwriters need
At first, very little: who you are, the forum, the stage, the amount in dispute and what you want to protect.
To obtain terms, the market will usually need counsel's merits opinion, the key pleadings, a costs budget and anything known about the opponent's ability to pay.
What underwriters assess
Merits, quantum, proportionality of the budget to a realistic recovery, the opponent's ability to pay, the forum's costs rules and the experience of the legal team.
Each is weighed against the others; a strong case with an unrecoverable judgment may be less attractive than a moderate case against a solvent defendant.
Through the life of the case
After inception the insured reports on progress, consults the insurer on settlement offers and follows reasonable legal advice.
Limits may be increased as the budget moves, and staged premiums step up at agreed points. If the case ends, the policy responds according to its terms.
Frequently asked
What information do underwriters need first?
A short outline: who the insured is, the forum, the stage, the amount in dispute and what you want protected. Documents are optional at first.
Is anything shared with insurers straight away?
No. Nothing is presented to any insurer until you have agreed what will be shared and with whom.
How long does it take to get litigation insurance?
With complete papers, indicative terms can often be obtained within a few weeks; complex risks take longer and urgent deadlines can be prioritised.
What happens if insurers decline?
You are told plainly why, which often points to what would need to change for the risk to become insurable.
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.