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Judgment Preservation Insurance
Protection for the value of a judgment against reversal or reduction on appeal.
- A judgment or award wonThis cover
- A judgment against you
- 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 Judgment Preservation Insurance?
Judgment Preservation Insurance is a form of litigation risk transfer that may be arranged around a judgment or award you have won. Protection for the value of a judgment against reversal or reduction on appeal. Terms, where available, are set case by case through underwriting.
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Schedule · specimen
Judgment Preservation 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
- A judgment or award you have won, 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
Parties who have won a significant judgment at first instance and face an appeal — and investors or lenders who want to rely on that judgment's value before it is final.
Clause 2
Insuring clause
What risks can be protected
An agreed portion of the judgment's value if it is reversed or reduced on appeal.
Clause 3
Operation of cover
How it works
Underwriters review the judgment, the grounds of appeal and independent appellate analysis.
If the judgment is overturned or reduced, the policy pays up to its limit. The insured can then monetise, settle or borrow against the judgment with a protected floor.
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)A limit set as a portion of the judgment;
- (b)A premium, often substantial, payable at inception; and
- (c)A retention so the insured keeps some appeal risk.
Capacity and appetite for this line have varied as the market has absorbed notable appellate reversals.
Clause 7
Exclusions
What it does not cover
Collection risk — a defendant who cannot or will not pay. Settlements you choose to make below the judgment before the appeal ends, unless the insurer agrees. The costs of fighting the appeal. And any part of the judgment above the insured amount.
Clause 8
Alternatives
Alternatives
- (a)Settling at a discount pending appeal;
- (b)Selling the judgment to a funder; and
- (c)Holding the risk.
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.
Judgment and award cover compared
| Cover | Protects against | Bought by | Does not cover |
|---|---|---|---|
| Judgment preservation | Reversal or reduction on appeal | Judgment winners, funders, lenders | The defendant failing to pay |
| Adverse judgment | A judgment against you above an agreed level | Defendants | Loss below the attachment point |
| Arbitration award insurance | Set-aside or annulment; in some structures, state non-payment | Award creditors, funders | Risks outside the policy terms |
Frequently asked
Does judgment preservation insurance cover the risk that the defendant does not pay?
Generally no. It covers reversal or reduction of the judgment on appeal, not the defendant's inability or refusal to pay. Collection risk is a separate question.
When does a judgment preservation policy pay out?
Typically once the appeal process has ended and the judgment has been reversed or reduced below the insured amount, in line with the policy terms.
How is the premium paid?
Usually as a premium at inception, reflecting the size of the insured amount and the underwriter's view of the appeal. Terms vary by risk.
Can an arbitration award be insured against being set aside?
Cover can sometimes be structured around the risk that an award is annulled, set aside or reduced, depending on the seat and the award. Whether terms are available depends on underwriting, and non-payment by the losing party is usually a separate risk.
What is the difference between judgment preservation and adverse judgment insurance?
Judgment preservation protects a party that has won, against reversal or reduction on appeal. Adverse judgment insurance protects a party that may lose, by capping the loss above an agreed level if a claim against it succeeds.
Who buys judgment preservation insurance?
Typically claimants that have won a substantial judgment or award and want certainty during an appeal, and funders or investors who hold an interest in that recovery.
Is Judgment Preservation 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.
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