Insurance solution
Litigation Risk Insurance
Broad contingent-risk transfer around identified disputes and liabilities.
- A judgment or award won
- A judgment against youThis cover
- 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 Litigation Risk Insurance?
Litigation Risk Insurance is a form of litigation risk transfer that may be arranged around contingent litigation exposure. Broad contingent-risk transfer around identified disputes and liabilities. Terms, where available, are set case by case through underwriting.
On this page2 min read
Schedule · specimen
Litigation Risk 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
- Contingent litigation exposure, 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
Businesses carrying an identified contingent legal exposure — an open dispute, a threatened claim, a regulatory or tax position — that affects a transaction, a financing or the balance sheet.
Clause 2
Insuring clause
What risks can be protected
The financial loss if the identified risk crystallises, as defined in the policy.
Clause 3
Operation of cover
How it works
Rather than covering a whole case, the policy is written around a specific legal question.
Underwriters assess that question with specialist counsel and set cover around the realistic loss.
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
Single-premium cover for a defined period or until the issue is resolved; retention and limit set against the likely range of loss.
Clause 7
Alternatives
Alternatives
- (a)Escrows and holdbacks in a transaction;
- (b)Indemnities from a seller; and
- (c)Reserving.
Clause 8
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.
Frequently asked
What is contingent risk insurance?
Insurance for an identified legal risk that may or may not crystallise — such as a pending tax dispute, a threatened claim or a regulatory question — written around the specific issue rather than a whole case.
When is litigation risk insurance used?
Most often in transactions and financings, where an identified legal risk would otherwise require an escrow, a price reduction or a specific indemnity.
Is Litigation Risk 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.