Judgment Risk
Can a Court Judgment Be Insured?
Judgment preservation, appeal risk and the treatment of a judgment as an asset.
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The short answer
Yes. Judgment preservation insurance can protect part of the value of a judgment you have won against the risk of reversal or reduction on appeal. It is written on the specific judgment and grounds of appeal and is most developed in the United States.
In brief
- It protects a judgment already won, not a claim still being pursued.
- Underwriters rely heavily on independent appellate analysis.
- Premiums are usually paid at inception and can be substantial.
- Capacity and appetite have varied following notable appellate reversals.
- 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.
Background
Judgment preservation cover grew as funders and investors sought to monetise large verdicts while appeals ran.
How it works in practice
The insurer reviews the judgment and appeal and agrees to pay an agreed amount if the judgment is reversed or reduced.
Worked example
A £50m judgment is insured for £25m. If reversed on appeal, the insurer pays £25m.
Figures are invented to show the mechanics. They describe no real client, matter or outcome.
What underwriters look for
A judgment on clear facts and settled law, with limited grounds of appeal.
Jurisdiction notes
Most common in the United States; appellate practice elsewhere affects appetite.
Related questions
Can an arbitral award be insured?
See the related guides below.
Frequently asked
What is judgment preservation insurance?
Insurance that protects part of the value of a judgment against being reversed or reduced on appeal.
Does judgment insurance cover the defendant not paying?
Generally no. It covers appeal risk, not collection risk.
How much does judgment preservation insurance cost?
There is no standard rate. The premium reflects the amount insured and the underwriter's view of the appeal, and is usually paid at inception.
Can an arbitral award be insured the same way?
Yes. Award insurance can protect against set-aside or annulment, and some structures cover non-payment by a state or state entity.
Can I borrow against an insured judgment?
Often. Insurance can give a lender a protected minimum value, on the policy terms, which can make a judgment easier to borrow against or sell while the appeal runs.
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.