ATE insurance: Unrecoverable, but worth the cost?

Morton Fraser Chair Jenny Dickson
Jenny Dickson
18 January 2019
Individuals and Families

What is ATE insurance?


When you raise a court action, there is always a risk you may be unsuccessful and be found liable to pay the other side's costs.   ATE, or After The Event, insurance, covers claimants against this risk.  The cost of ATE insurance varies, depending largely on the nature of the court action.

In personal injury cases, ATE insurance is common and the cost of the premium is modest.   Normally, the premium doesn't need to be paid up front.  Instead, the premium is only paid if the claimant is successful (and recovers damages).   If the claimant is unsuccessful, the insurance will pay out to meet any of the other side's costs the claimant is found liable for.   This works very well for clients in personal injury cases.   Their "no win no fee" arrangement will cover their own legal costs and the ATE insurance will cover the other side's costs.   They can use ATE insurance to reduce any potential liability for costs.

Can you recover the ATE premium from the other party?

Recently, a claimant attempted to recover the ATE insurance premium from the other side (McGraddie -v- McGraddie & Anr [2015] UKSC 1).   He tried to argue that it was an expense of the litigation, so should be payable by the other side.   The case went all the way to the Supreme Court in London.   It was held that it was not possible to recover the premium.   Although it was reasonable to incur a premium for ATE insurance, it was not "an expense" under the rules of court, so it could not be recovered.   There had been a number of previous cases in which ATE insurance premiums had also been found to be unrecoverable.

Why take out ATE insurance?

If the ATE insurance premium is a cost that you would not recover in court proceedings, why incur that cost?   The costs of litigation can be substantial.   As soon as you raise a court action, you run the risk that you could be liable to meet the other side's costs.   Although we can estimate what these are likely to be, they will not be known with certainty until the court action has concluded.   ATE insurance provides peace of mind, knowing that there are no further costs to be incurred at the conclusion of the litigation.

We are happy to discuss your ATE needs for any litigation.



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