Before and after the event: Insurance cover
There are two types of litigation insurance: before the event insurance and after the event insurance.
Before the event insurance
You should always consider whether you have any pre-existing legal expenses insurance to help cover the costs of your claim. This insurance is often connected to a household or general corporate insurance policy. Sometimes, you may be able to combine this insurance with other funding options where it is anticipated that the insurance cover will not provide sufficient protection for the full costs of the claim, such as a conditional fee agreement, or after the event legal expenses insurance.
Each individual policy will need to be looked at to see what is covered under the insurance policy.
After the event insurance
After the event insurance covers the costs incurred in the pursuit or defence of litigation. The policy is purchased after the legal dispute has arisen. It is also known as 'ATE insurance', 'litigation insurance', 'conditional fee insurance', and 'post-event insurance'.
The insurance can be purchased for nearly all areas of litigation and is frequently used in both civil and commercial disputes.
Ordinarily, ATE Insurance comes with some form of premium discount factor built in. This means that the premium effectively increases, in line with the insurer's financial risk, the closer the case gets to trial. Thus, there is an incentive to settle the case early in order to get a reduced liability for the premium.
Payment of insurance premiums
Payment of premiums for before the event insurance is paid in advance as part of your home insurance policy payments.
Payment of premiums for after the event insurance is generally deferred until the end of the case and dependent upon success. In addition, insurance premiums can be recovered from the other side.
Advantages of Insurance
- Insurance covers your liability for your opponent's legal costs, whether that liability arises from losing your case, discontinuance or some other outcome.
- In certain circumstances, it may also be possible to obtain coverage for your own solicitor's fees, or a proportion of such fees.
- You can afford to litigate with some certainty about what your financial losses will be if you fail to win your case.
- Sometimes there is no upfront premium to pay.
- Premiums are recoverable and proportionate to the risks in the case
- Insurance levels the playing field for clients lacking the financial strength of their opponent.
- Insurance can be a useful negotiating tool once your opponent knows it's in place.
If you're working with a solicitor, he should be able to provide you with more information about litigation insurance. If currently you don't have legal representation, you can find solicitors who specialise in litigation in your area for free via solicitor matching services , which can also help you to understand the best course of action for your situation and whether you are even ready to hire a solicitor.
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