After The Event
Insurance (ATE)
Options

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What is ATE Insurance?

After The Event (ATE) Insurance is an insurance policy taken out to cover the legal costs of litigation.

It’s available to both claimants and defendants in a wide range of litigation cases, although this is a funding option mostly used by claimants.

At Witan Solicitors, we can discuss your ATE premium options, advise you on the best solutions for your case and purchase an after the event insurance on your behalf to help you fund your claim.

ATE insurance is constantly evolving and changing in response to new regulations and every insurer has a different approach to their pricing and level of cover. Below, we’ll cover a summary of some of the current insurance and premium payment solutions but to recommend a specific one, we will need to learn more about your individual case to offer tailored advice.

By understanding the exact nature and the stage of your proceedings, we can advise swiftly on the options that best meet your requirements, some of which may not be shown below.

What do ATE Policies Cover?

ATE policies vary but the most common form of cover will provide an indemnity for adverse costs and own disbursements (in other words the opponent’s costs for which you may be liable, and your own recoverable expenses for running the case).

A number of insurers will not indemnify counsel’s fees, while others are more relaxed and will include such fees as part of the cover.

Policies that cover their own solicitor’s fees are available but are more difficult to obtain. Only a few insurers are willing to offer this, and when they do, take a very cautious approach.

How much does ATE cost? – Premium Rating Methods

The insurer determines premium rates by reviewing a summary of information case by case and takes an ‘underwriting view’ of the financial risk they may face (using loading factors such as their own historical claims experience, opponent’s financial security, likelihood of settlement, etc.) The level of the information required by underwriters will vary according to the complexity and juncture of the dispute.

Premiums are often assessed according to an underwriter’s personal opinion of the prospects and their previous experience of similar cases.

Premium rates are then multiplied against how much cover you buy (i.e. the exact costs and expenses included), and when you agree to pay – as shown below.

It is important therefore to provide insurers with a clear and concise application and presentation of your case. A well-presented application with the correct enclosures can result in the insurers agreeing to offer terms in the first instance, and in more competitive premium levels should they decide to do so.

Examples of Premium Calculations and Payment Options

A Deferred Premium

A deferred premium is payable when the case is concluded. Premiums for a deferred premium policy are usually more expensive than if the premium is paid up front. There are two reasons for this: first the cash-flow implications for insurers (waiting several years to be paid); also because the risk assessment is usually made at the beginning of a claim and insurers will err on the side of caution.

FAQ

When was the ATE introduced?

The After The Event Insurance was first introduced in 1999 with The Access to Justice Act which was designed to offer alternative funding options for litigation. 

Why do I need After The Event Insurance?

ATE insurance gives you the peace of mind that if you start a claim, you won’t have to pay the legal fees and expenses of your opponent even if you don’t succeed in court. 

What does ATE insurance cover?

After The Event Insurance is used to cover a number of fees you’d potentially have to pay if you lose your case in court, such as:

• The full amount you would have to pay for the other side’s legal fees & expenses
• Your disbursements (that’s your legal fees, court fees, medical reports, etc)

Your ATE premium can also be included in the insurance cover as it’s self-insured as a disbursement. 

Any disadvantages of ATE insurance?

Purchasing an ATE insurance can add a level of complexity in the context of commercial litigation as the insurer may set a minimum settlement amount making it harder to reach a reasonable resolution. 

The cover may also be withdrawn at any point if your chances of success fall below a certain threshold set by the insurer. 

How can I purchase ATE insurance?

You will need to have a solicitor purchase the ATE for you. This can only be done after the incidents giving rise to your claim have occurred (after the event) but usually before your claim is made. 

When and how much ATE cover should I buy?

It is clearly impossible to know in advance which cases will settle and which will run to a full trial. It should always be anticipated that a case may go all the way to trial and that the level of indemnity (the limit the insurers will pay) should reflect this. The prime consideration is deciding how much cover to buy and when to prefer to pay for it.

This is done by determining a worst-case scenario of your opponent’s costs and expenses. In addition if cover is required for own disbursements or own solicitors / counsel costs not covered by a CFA arrangement, these need to be estimated within the requested policy limit. Some policies can cover costs and expenses already incurred prior to the inception of the policy. The amount of any retrospective cover must be accounted for in the total policy limit being requested.

We also need to take account of the specific details of the type of claim, cost exposure against timeline, the opponent’s attitude to settling and what would constitute an acceptable sum offered, to determine the type of cover and most suitable premium payment options.

ATE VS CFA : How does it work?

When a Conditional Fee Agreement (CFA) is in place, the solicitor agrees that they will not charge the claimant if the claim is unsuccessful. It’s also referred to as a “No win, no fee” agreement. 

However, if the case is lost, the claimant may still be liable for the legal cost of the defendant, as well as some costs incurred by their own solicitor while preparing for the case. ATE insurance can be bought to cover that risk. It protects you from having to pay fees if your claim is unsuccessful.

How much does ATE cost?

The good thing about an ATE insurance policy is that it doesn’t usually include any upfront fees. It’s only paid when the case is resolved in one of two ways:

• Your claim is successful – the cost of the ATE will be taken out of your compensation/damages
• Your claim is unsuccessful – the cost of the ATE insurance will be classed as a disbursement and you will not have to pay anything separately 

Can ATE Insurance be used as Security for Costs?

The courts can accept ATE as security for costs but this is not guaranteed. You may wish to refer to the case for In Geophysical Service Centre Company Ltd v Dowell Schlumberger (Middle East) Inc ([2013] EWHC 147 where Stuart Smith J that held that an ATE policy was suitable security for the defendant’s costs, if provided by a reputable ATE insurer and where there was no allegation of fraud.

However, simply evidencing the existence of an ATE policy may not be deemed adequate as it can be argued that a policy can be avoided if there is a breach of terms by the policyholder (such as non-disclosure or fraud). Some insurers can offer a non-avoidance policy assignment or irrecoverable bond to act as additional security but will apply an additional cost.