Tool 02
Funding vs Insurance Economics
Funding buys capital and transfers downside at the cost of upside. Insurance caps a defined downside and leaves the recovery with you. This models the difference on a single successful outcome.
Is litigation funding or litigation insurance cheaper?
It depends on the outcome. Funding costs a share of the recovery if you win and nothing if you lose. Insurance costs a premium — often payable only on success — and caps a defined loss. This tool compares what you keep in each scenario on illustrative terms.
Self-funded
Claimant net on success
£26m
- To funder
- £0
- Carried by insurer
- £0
- Downside if unsuccessful
- £-7m
Funded
Claimant net on success
£18m
- To funder
- £12m
- Carried by insurer
- £0
- Downside if unsuccessful
- £0
Funded + insured
Claimant net on success
£18m
- To funder
- £12m
- Carried by insurer
- £2.4m
- Downside if unsuccessful
- £-600k
Downside comparison
Illustrative example only
- Self-funded
- £7m
- Funded
- £0
- Funded + insured
- £600k
How to read this
- Funder return is modelled as the greater of a multiple on drawn capital and a percentage of proceeds — two common commercial shapes.
- The downside row shows what you would carry if the claim failed under each route, not a probability-weighted value.
- Insurance premium is not modelled: premium structures vary and no pricing is quoted anywhere on this site.
- Real funding agreements include waterfalls, priorities and budget conditions that change these numbers materially.
From illustration to real terms
These tools describe how exposure is measured. Terms, limits and availability are decided by underwriting on the facts of the matter. See how cover is underwritten.
How cover is underwrittenGeneral information only. This tool does not provide insurance, legal, investment or financial advice, does not quote premiums, and does not indicate that cover is available.
All figures are illustrative and used to explain how exposure is measured. They are not indicative of pricing, terms or the availability of cover.