After-the-Event (ATE) Legal Expenses Insurance
After-the-Event (ATE) Legal Expenses Insurance
Covers adverse costs and disbursement risk for a litigant after a dispute has already arisen.
After-the-event legal expenses insurance is purchased once a dispute has already arisen, covering a litigant's exposure to adverse costs and, in some structures, their own disbursements if the case is unsuccessful. It is used by claimants, defendants, and litigation funders to manage the cost risk of pursuing or defending litigation and arbitration.
What the coverage does
Litigation carries a cost risk that is separate from the outcome of the underlying claim: in many jurisdictions, an unsuccessful party can be ordered to pay the winning side's legal costs. ATE insurance is taken out after a dispute has already begun, specifically to cover that adverse costs exposure, and often the insured's own disbursements such as expert fees and court costs if the case does not succeed.
It differs from before-the-event legal expenses cover, which is a feature of some general policies purchased before any dispute exists. ATE is a bespoke, case-specific policy underwritten around the merits of a particular claim.
Who needs it
Commercial claimants pursuing high-value litigation or arbitration, defendants facing significant adverse cost exposure, insolvency practitioners pursuing claims on behalf of a company in liquidation, and litigation funders structuring a funded case all use ATE cover as part of the overall cost-risk management for a matter.
It is particularly relevant where a litigation funder is financing the claim, since funders and their counterparties often require ATE cover as part of the funding structure to cap downside cost exposure.
What it covers and excludes in practice
A typical ATE policy responds to adverse costs ordered against the insured if the claim or defense is unsuccessful, and may extend to the insured's own disbursements incurred along the way. Premiums are frequently structured to be contingent, payable only if the case succeeds, though structures vary by insurer and jurisdiction.
Exclusions commonly include claims assessed by underwriters as having poor merits from the outset, conduct-related costs sanctions such as those arising from procedural misconduct, and costs incurred before the policy incepted. Underwriters typically require a merits assessment, often from counsel, before binding cover.
What drives price and how to structure it
Pricing reflects the underwriter's assessment of the claim's merits, the quantum at stake, the jurisdiction and its costs-shifting rules, the stage of proceedings at which cover is sought, and the identity and track record of the legal team running the case.
Structuring decisions include the level of cover relative to anticipated adverse costs exposure, whether premium is deferred and contingent on success, and how the policy interacts with any litigation funding agreement already in place for the matter.
What it typically responds to
- Adverse costs exposure. Costs the insured may be ordered to pay the opposing party if unsuccessful.
- Own disbursements. Expert fees, court fees, and other case costs, in policies structured to include them.
- Litigation and arbitration matters. Commercial disputes, insolvency claims, and arbitration proceedings.
- Funded litigation structures. Cover coordinated with third-party litigation funding arrangements.
Common exclusions
- Poor-merits claims. Cases assessed as unlikely to succeed at underwriting, typically declined.
- Pre-policy costs. Costs incurred in the dispute before the ATE policy incepted.
- Conduct-related cost sanctions. Costs orders arising from procedural misconduct or bad faith litigation tactics.
- Unrelated matters. Disputes outside the specific claim identified and underwritten for the policy.
What drives price
- Merits assessment
- Underwriter and counsel evaluation of the likelihood of success.
- Quantum at stake
- Size of the claim and corresponding adverse costs exposure.
- Jurisdiction and costs rules
- Local rules governing costs-shifting between winning and losing parties.
- Stage of proceedings
- How far the matter has progressed when cover is sought.
- Legal team track record
- Experience and history of the counsel running the matter.
Provident does not publish premium figures. Pricing is set by each carrier and depends on the specific risk.
Questions we get asked
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