Rising to the Challenge: How ATE can benefit you and your customers

What is ATE insurance?

Carol Parsons

DAS

Head of ATE

Litigation costs are on the rise and, in most cases, unsuccessful parties to litigation will be required to pay some or all their opponent’s costs along with their own costs and disbursements.

After the Event insurance, commonly known as ATE insurance, often used alongside a no win, no fee agreement with the customer’s solicitor, can help mitigate the financial risk of pursuing a legal claim. DAS policies provides cover for adverse costs and any unrecovered disbursements in the event of a legal case being lost.

ATE can be purchased for most areas of litigation, except for matrimonial and criminal cases. It is taken out once a legal dispute has arisen and is available at any point in the litigation process, although the later in the case the policy is incepted the more expensive the premium is likely to be.

All solicitors have an obligation to discuss how a customer will fund the costs of litigation and this should include questions over whether there is available insurance against the risk of paying the other sides costs and own disbursements. Failure to consider whether funding is available may leave a customer vulnerable to the financial risks of litigation, which could be costly.

Brokers have a unique opportunity to work with their solicitor business partners to improve their understanding of ATE and ensure relevant protection is being offered where needed.

How is ATE different to BTE insurance?

Before the Event insurance is taken out to provide cover should legal action become necessary in the future and is typically an extension to a home, motor or business insurance policy, although standalone policies are also available.

You can learn more about the differences between ATE and BTE here.

What are the usual limits of indemnity on an ATE policy?

For commercial claims limits of indemnity will be case-specific. Our civil litigation policy offers cover for a range of issues including contract disputes, professional negligence claims, debt recovery, insolvency, property disputes and contentious probate. Such a broad portfolio of risks requires a more bespoke view of the level of indemnity required on a case-by-case basis.

For most personal injury cases (including clinical negligence and industrial disease) limits of indemnity will be standard, though DAS ATE products do provide for tailored limits depending on the needs of a specific case. We always advise our partners that it is best to think about a realistic limit covering the likely exposure for a customer to conclusion, as top-up premiums can be expensive.

When is an ATE premium payable?

DAS ATE premiums are often staged to ensure that they remain as proportionate as possible with cases settling pre-trial attracting a lower premium than those settling at trial. Our premiums are generally offered on a deferred and contingent basis, meaning that the customer is only responsible to pay the premium on conclusion of the case and only if the case is successful.

For some commercial litigation disputes we may request an upfront premium either alone or in combination with premiums that are deferred and contingent as this can be a way of keeping premium costs down.

In most instances, if a customer loses a case the premium will be self-insured.

Net premium will be subject to IPT and commission which is agreed at the start of our relationship with you and will form part of our terms of business.

Are ATE premiums recoverable?

Whilst recoverability of ATE premiums has all but disappeared since the introduction of LASPO in April 2013, it remains the case that premiums can be recovered in publication and privacy disputes, Mesothelioma cases and for initial experts reports on liability and causation in clinical negligence cases.

Is ATE insurance worth it?

Customers with meritorious claims may be put off bringing a legal action if they fear they may be exposed to further financial loss. If your customer does not have suitable funding, they may be exposed to unnecessary financial risk if their claim is unsuccessful. ATE insurance can help mitigate this financial risk re-opening the door to access justice.

DAS works closely with its partners to ensure our products are offered alongside a conditional fee agreement which provides for the solicitor's fees to be paid only if the client wins the case and is awarded compensation.

As ATE premiums are usually deferred until the conclusion of the case, with the premium only being payable if the case is successful, customers have much more certainty over the cost of litigation, can protect themselves from the adverse impact of losing a case and do not need to find cash to start their case.

In personal injury cases the cost of the DAS ATE premium is usually modest, with the policy providing peace of mind that there will be no unforeseen costs for the individual claimant on conclusion of the proceedings.

For many small businesses who may not want their working capital tied up in legal proceedings for several years, ATE insurance provides an avenue through which they can afford to litigate. Whilst in some instances it will be necessary to weight up the cost of ATE versus the potential cost of litigation, key to DAS offering a policy is to ensure that the premium cost is proportionate to the risk being insured.

Why DAS ATE?

As access to justice becomes more expensive ATE insurance becomes a powerful tool to support your customers and/or their customers if they become involved in a legal dispute. As leaders in the industry and with almost 50 years’ experience DAS is well placed to provide you and your customers with advice and guidance on the range and suitability of ATE products available.

For more information on our ATE products please contact Carol Parsons or Fran Clothier.