ATE
Insurance

ATE FAQs

• What is After the Event Insurance?

  After The Event Insurance (ATE) is form of legal expenses insurance that can be taken out after a legal dispute has happened but before any legal action is commenced. Embarking on any type of litigation carries the risk of the loser having to pay the winner’s legal costs. ATE provides insurance against this liability if the worst happens. Normally the policy covers the claimant’s disbursements (expert reports, issue fees, etc.) and if the case is lost it will cover the opponent’s disbursements and the legal costs, they have incurred in defending the claim that the Court orders the loser to pay. ATE does not cover the claimant’s own costs that they are liable to pay their solicitor for acting on their behalf, but many solicitors now take cases on a conditional fee agreement (also known as “no win, no fee”). This means that a claimant’s solicitor agrees not to charge a client if the case loses but if the case wins, they will charge a success fee.

• When is After the Event Insurance needed?

  When pursuing or defending a claim possibly the biggest risk that is faced is the payment of legal costs. Quite often this risk deters valid claims from being taken. ATE insurance mitigates this risk by providing a safety net that allows anybody with a valid and genuine claim to pursue it with the reassurance that if the worst happens the adverse costs will be covered. For businesses, the existence of an ATE insurance allows the litigation risk to be taken “off-balance” sheet rather than having to make a provision within the accounts.

• What types of After the Event Insurance can Prosperity assist with

  We will consider virtually any type of legal action. See above for our standard range of policies.  We are always more than happy to consider specific cases or new areas of litigation. To find out more and see if we can help, please contact us on  0800 524 4235, email info@prosperityinsurance.co.uk or complete the enquiry form on our contact page.

• What is the cost of After the Event Insurance?

  For lawyers who specialise in litigation such as personal injury, industrial disease, clinical and dental negligence, housing disrepair, etc. Prosperity Insurance can arrange a delegated authority after the event insurance facility. This enables a solicitor to issue policies at a pre-agreed premium usually without any reference to the insurer. The premiums will be standard for each type of risk and, dependent upon what type of claim is being covered and the volume of cases that cover is required for, we will work on our supporting lawyers’ behalf to obtain the most competitive premiums we can.

  For bespoke policies that are issued for specific, individual cases the premium is staged and the amount due depends upon when a case settles. As an example, if the premium quoted is £20,000 then this will be the premium due if the case goes to trial. However, if the case settles without the need for proceedings to be issued then the premium is substantially discounted and could be as low as £2,500. The next stage point is when proceedings are issued as the risk increases. A discount still applies but it is reduced and at this stage the premium may be around £5,500. If the case proceeds and a trial date is set, then the discount from the original premium is much less but still less than the full premium. Typically, and depending on the actual case we would expect the premium, if the case settled at this point, to be around £14,000 in the example given.

  The above indications are the most common ways in which premiums are quoted. There are two main factors that determine the actual cost of ATE insurance. The first is the limit of indemnity required which is and should reflect the expected amount of a claimant’s own disbursements and the opponents’ costs if the case is lost. The second factor is the estimate of the prospects of success of the litigation. Using these two pieces of information a premium is calculated. So, for example, a limit of indemnity with a high chance of success will always give a lower premium than a similar claim with the same level of indemnity but that has lower prospects of success.

  For a detailed quote please contact us and give us as much detail as you can regarding the case(s) that you require cover for.

• How does an ATE policy work?

  Once an ATE insurance policy is in force the solicitor keeps the underwriters updated. As a case progresses there are certain key points that need to be communicated to the insurer such as the issue of proceedings, offers made to settle, details of any expert reports or opinions, details of any defence that may be put forward etc. What is required and when is clearly laid out and agreed upon before the litigation. By following this agreed process continuation of policy cover is maintained.

• When should ATE Insurance be taken out?

  ATE insurance should be taken out as soon as possible. Once litigation has started there is a risk that legal costs and disbursements will be incurred, and these will not be covered before the ATE policy is in force. As already described a staged premium is discounted the earlier a claim is settled and once the other side is aware of the existence of an ATE policy it may encourage earlier settlement as it demonstrates that an underwriter believes that the claim has a good chance of being successful. It should also be borne in mind is that delaying taking out ATE cover may mean that further along the line the premium could be higher or in some cases not even available.

• Who Pays the After the Event Insurance premium?

  Until March 2013 the premium for an ATE policy was recoverable from the Defendant if the case was won. Following legislative changes, the recoverability of ATE premiums from the defendant was abolished other than for a small number of specific types of claims such as privacy matters (e.g., defamation), mesothelioma, a proportion of the premium for medical negligence relating to obtaining expert reports, etc. Insolvency matters were initially included in the exemptions but that has been subsequently withdrawn. In most instances, this means that the claimant is responsible for paying the premium but as referred to in the other “Frequently Asked Questions” the premium is only payable in successful cases and is not due until the case is settled.

  If the case is lost, then the premium is self-insured and the premium is waived.  In effect, this means that taking out ATE Insurance is an obvious and straightforward way to protect both the Client and Solicitor.

• When is the premium paid?

  The standard payment terms on ATE insurance are that the premium is deferred and contingent, i.e., the premium is only payable if the case is successful, and the premium is paid at the conclusion of the case. If the case is unsuccessful then the claim is paid, and the premium is included as part of the claim. There are some cases however where the premium must be paid upfront, particularly if the case is unlikely to result in any damages being awarded such as Judicial Review policies to cover defence costs.

• Should a solicitor advise a client about After the Event Insurance?

  It is not for Prosperity to tell a solicitor what they should and should not do but we believe the answer is yes.  The following is a quote from the Solicitors Regulation Authority “You must give your client the best information possible about the likely overall cost of a matter both at the outset and, when appropriate, as the matter progresses. In particular, you must: discuss with the client how the client will pay, in particular: whether the client’s own costs are covered by insurance; and discuss with the client whether their liability for another party’s costs may be covered by existing insurance or whether specially purchased insurance may be obtained” and we would recommend that any solicitor should check The Solicitors Regulation Authority (SRA) Code of Conduct.

• How can I arrange After the Event Insurance through Prosperity Insurance?

  Lawyers simply need to contact us by email at info@prosperityinsurance.co.uk, use the online contact form on our website or you can call us on 0800 524 4235. We will be more than happy to discuss your client’s case with you in complete confidence. We will work with you to ascertain if their case is suitable for ATE insurance. If it is not, we will explain why not. If it is a case that ATE works for, we aim to obtain an “in principle” decision from the Underwriters within 5 working days and we will guide you through their process you need to follow to put the ATE insurance in place including full details of the updating required, the premium, and when it is payable. We will work with you to tailor the perfect policy for you and your client’s needs.

• Can an individual arrange After the Event Insurance?

  The simple answer is no. When deciding whether a matter is suitable for After the Event insurance, we will need to obtain a large amount of information from the solicitors and barristers acting on behalf of a client. This can include the technical points of law that provide the basis of a piece of litigation, an estimate of how much expert advice may be needed to support the case, the expected costs of any reports, the estimated legal costs and disbursements of the opponent, the basis upon which a solicitor is acting, etc. and many other issues which are beyond a lay claimant.

• Do Prosperity offer litigation funding options?

  Whilst Prosperity does not offer litigation funding itself, we do have relationships with several specialist litigation funding companies who can offer a range of funding options whether for an individual case or for a wider “basket” of claims.  If you require any form of litigation funding, please contact us, and let us have details of the level of funding required, the purpose of the funding (e.g., disbursements, disbursements, and own solicitors’ costs), and when it will be required. It should be understood that almost every funder will require a supporting ATE insurance policy(s).