After the event insurance: what it covers and whether premiums are recoverable

ATE insurance is taken out after a dispute has arisen. It typically covers the opponent’s costs the insured is ordered to pay if the case is lost, and often the insured’s own disbursements such as expert and court fees. Policies differ widely in limits of indemnity, exclusions and conditions, including obligations to follow lawyers’ advice and to notify insurers of offers.

ATE is frequently used alongside a conditional fee agreement or damages-based agreement, filling the gap that those arrangements leave in protection against adverse costs. In commercial litigation it can also support an answer to a security for costs application, provided the policy wording gives adequate comfort.

Premiums may be paid upfront, but in many claims they are deferred until the end of the case and payable only on success. Staged premiums increase as the case progresses, for example on issue of proceedings or as trial approaches, reflecting the insurer’s growing risk.

Because the premium is often deducted from damages or paid from recovered sums, clients should understand the likely figure at each stage. Solicitors recommending ATE should be able to explain why the policy is suitable and whether alternatives were considered.

For policies taken out on or after 1 April 2013, the general rule is that the premium cannot be recovered from the paying party. The main exception is clinical negligence, where part of the premium covering the risk of paying for expert reports on liability and causation may be recoverable, subject to conditions in the regulations.

Older policies and certain transitional categories, such as some mesothelioma and insolvency proceedings, may still carry recoverable premiums. Where recovery is claimed, the paying party may challenge reasonableness, the level of cover, the staging, and whether the policy was needed at all. Evidence from the insurer about how the premium was calculated can be decisive.

On detailed assessment, the ATE premium appears as a disbursement. In clinical negligence matters, receiving parties should identify the recoverable element clearly and keep the supporting schedule. Paying parties will often seek the policy, the premium calculation and confirmation of which risks are priced.

There is also an interplay with QOCS. Where a claimant has QOCS protection in personal injury, the need for adverse costs cover may be reduced, but policies still often cover own-side disbursements and the risk of losing protection, for example on a finding of fundamental dishonesty.