ATE Insurance
What Is After-the-Event Insurance?
Cover arranged after a dispute has arisen, and where it sits in a costs strategy.
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The short answer
After-the-event (ATE) insurance is taken out after a dispute has arisen to protect a party, usually a claimant, against the risk of paying the other side's legal costs if the case is lost. Many policies also cover the insured's own disbursements. Premiums are often deferred and payable only if the case succeeds.
In brief
- ATE mainly covers adverse costs and own disbursements.
- It is bought after the dispute arises, unlike before-the-event legal expenses cover.
- In England and Wales premiums have generally not been recoverable from the loser since April 2013.
- Suitably worded ATE can be used to meet security for costs.
- 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.
Background
ATE developed in England and Wales to support access to justice under conditional fee arrangements and is now widely used in commercial disputes.
How it works in practice
A limit is set against expected adverse costs, often staged through the case.
The insured reports to the insurer and consults it on settlement. If the case is lost, the policy pays the costs order up to the limit.
Worked example
A claimant insures £1.5m of adverse costs with a deferred, contingent premium. It loses at trial and is ordered to pay £1.2m of costs; the insurer pays the £1.2m.
Figures are invented to show the mechanics. They describe no real client, matter or outcome.
What underwriters look for
A merits opinion with a clear view of prospects, a sensible budget and a defendant able to pay a judgment.
Jurisdiction notes
Most relevant in England and Wales, Australia, Singapore and Hong Kong, where costs follow the event.
Related questions
Can ATE satisfy security for costs?
What does it cost? See the related guides below.
Frequently asked
When should ATE insurance be bought?
Usually early — before or soon after proceedings are issued — when the premium tends to be lower and cover can be staged. It can also be bought later, including to answer a security for costs application.
What does ATE mean in insurance?
After the event: the policy is taken out after the events giving rise to the dispute, in contrast to before-the-event legal expenses cover.
Can ATE be cancelled during the case?
Policies usually allow the insurer to withdraw cover in defined circumstances, for example if prospects of success fall materially or the insured breaches its conditions. The wording sets out what happens to costs already covered.
Who pays for ATE insurance?
The insured — usually the claimant. Premiums are often deferred and payable only if the case succeeds, typically from the damages recovered.
Is ATE insurance only for personal injury claims?
No. It began in personal injury but is widely used in commercial litigation and arbitration, where policies are underwritten case by case with much larger limits.
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.