What is ATE Insurance?

After The Event Insurance (ATE Insurance) is insurance which covers the legal costs and expenses involved in litigation.

It can be used in any type of litigation and by either a claimant or a defendant, although in practice it is mainly used by claimants. It is normally purchased by solicitors on behalf of their clients. The policies we arrange are available only to claimants and apart from some specialised products our policies are normally only available for personal injury claims.

What does ATE Insurance Cover?

It normally covers the legal costs which a Claimant must pay to a defendant when a claim is unsuccessful – when the claim is either lost at trial, or abandoned/settled after the defendant has incurred costs which the claimant is liable to pay.

Our ClaimSafe policies cover personal injury claimants not only for those adverse legal costs, but also for the disbursements which their solicitors have incurred in pursuing the personal injury claim – the sums they have laid out on the claimant's behalf: police and medical reports, Court fees, Counsel’s fees etc.

When Should ATE Insurance be Purchased?

ATE Insurance is purchased after an accident (“The Event”) has taken place, but normally before any significant legal costs or disbursements are incurred, so most ATE policies are purchased at the point at which a solicitor begins a claim. The overall concept of an ATE policy is that it will protect the claimant against costs risks right from the outset - if a claim is insured at a late stage then (as with most insurance policies) costs and disbursements which occurred before the date of the policy will not normally be covered. Since, when they commence, many personal injury claims fall within a broadly similar risk category, many ATE insurers offer a standardised policy premium if the case is insured early.

A number of ATE insurance policies involve solicitors in considerable administration however, (requesting a policy, updating the insurer etc) and this has caused some solicitors to avoid insuring cases until they become risky and/or costs are high. If the case is lost, the disbursements incurred before the policy started are then paid by the solicitors out of their own pockets. When ATE insurance was still being developed, defendants argued that this procedure should always be adopted - they suggested that a claimant should not purchase an ATE policy until Court Proceedings were started (because it is only from that point onwards that a claimant becomes liable to pay the other side’s costs). The Supreme Court (Callery v Gray) disagreed however and confirmed that it was entirely reasonable to purchase ATE insurance right at the beginning of a case. It acknowledged that when a case first started there was only a very small risk that costs might eventually be awarded against a claimant, but it nevertheless affirmed the insurance principle that the many low risks pay for the large risks which very occasionally occur.

Despite this, an informal practice has grown up of solicitors purchasing their client’s ATE policy only at a later stage - generally when Court proceedings are issued or sometimes even later - once it is apparent that the claim is becoming complex or risky. The courts have confirmed that it is permissible to insure late in the day - the premium will be recoverable from the defendant even if it was incurred the day before a trial began! The general disadvantage of insuring late however, is that a high level of costs will have been incurred by this time, and the risks of losing are considerable, so the ATE insurer’s vetting procedure is likely to be extremely rigorous and the premium the ATE insurer charges will be very high in comparison to what is normally a fixed standard premium if the policy is purchased at the outset. The difficulty will lie firstly in convincing the insurer that the claim is still likely to succeed, and secondly in recovering this high premium from the defendant who will argue that it would have been much cheaper to insure at the outset.

How Does ATE Insurance Relate to a CFA?

A CFA (Conditional Fee Agreement) is a "No win, no fee” agreement. The claimant's solicitor agrees that he will not charge for his services if the claim is unsuccessful. Even with such an agreement in place however, the claimant still risks being liable for his solicitor’s disbursements, and for the defendant’s costs if he loses. The Law Society’s wording on its recommended form of CFA states that the claimant may have to pay his solicitor’s disbursements if the claim is unsuccessful. The ClaimSafe policy covers this risk.

Sometimes there is no CFA between a solicitor and the claimant – instead, the claimant agrees to pay his solicitor irrespective of whether or not the claim is successful, but normally ATE Insurance should still be purchased because the claimant will again want to avoid being liable for his solicitor’s disbursements and the defendant’s costs if he loses. Our ClaimSafe policy can be utilised in such circumstances.