When Should Claimants Consider ATE Insurance?

Litigation is rarely simple. Even if you have a strong case, the risk of financial loss can weigh heavily on your decision to proceed. One of the biggest concerns claimants face is the possibility of paying the other side’s legal costs if the case does not succeed. That is where ATE insurance (After the Event insurance) comes into play.

This guide will break down when claimants should consider ATE insurance, how it works, and what factors make it a smart choice. We’ll also share practical examples from real cases to show how it can protect both individuals and businesses during litigation. By the end, you’ll know whether ATE insurance might be right for your situation.

What Is ATE Insurance?

ATE insurance is a type of legal expenses insurance taken out after a legal dispute has already arisen. Unlike “before the event” (BTE) cover that comes bundled with home or motor insurance policies, ATE is specifically designed to protect claimants in litigation once they know they’ll be pursuing or defending a claim. In simple terms, it provides peace of mind. If the case is lost, the insurer covers the opponent’s legal costs (and sometimes the claimant’s own disbursements). Without it, losing a case could mean facing a significant financial burden on top of the disappointment of the outcome. For example, imagine a small business bringing a professional negligence claim against a former adviser. Even with a strong case, there’s no guarantee of success. If they lose, the business may be ordered to pay tens of thousands of pounds in legal fees. ATE insurance ensures those costs don’t fall on the claimant’s shoulders.

The Financial Risks of Litigation

Before looking at when to consider ATE insurance, it’s worth being clear about the financial risks claimants face in litigation:

• Adverse costs: If the claimant loses, they may have to pay the defendant’s legal fees.
• Own disbursements: Expert reports, court fees, and barristers’ fees can add up quickly.
• Conditional Fee Agreements (CFAs): Even under “no win, no fee” arrangements, disbursements and adverse costs often remain uncovered.

These risks often discourage claimants with otherwise strong cases from pursuing justice. This is especially true for individuals, small firms, and those already under financial strain. ATE insurance helps level the playing field by removing a significant portion of that risk.

When Claimants Should Consider ATE Insurance

The key question is: at what stage, and in what situations, should claimants take out ATE insurance? While every case is unique, there are several scenarios where ATE is especially valuable.

1. When the Case Involves High Costs Exposure

The higher the potential costs if the case fails, the more attractive ATE becomes. Complex litigation, such as commercial disputes, professional negligence claims, or group actions, can generate six-figure legal bills. Claimants in these cases usually cannot afford to risk losing without protection.

Example: A group of homeowners bringing a construction defect claim against a developer faced the possibility of paying substantial defence costs if unsuccessful. Their ATE policy ensured that if they lost, the insurer would cover the other side’s legal fees, giving them the confidence to proceed.

2. When the Claimant Cannot Absorb the Risk

Not every individual or business has the financial capacity to pay legal costs out of pocket. Even if they technically could, tying up cash in litigation risk is often impractical. ATE insurance shifts that risk to an insurer.

Example: An SME with limited cash flow considered a professional negligence claim against a former accountant. Without ATE insurance, the directors feared the company’s survival could be threatened if the case failed. The policy allowed them to litigate without risking insolvency.

3. When Litigation Funding Is Involved

Litigation funders often require claimants to secure ATE insurance as a condition of funding. Funders want to protect their investment and ensure adverse costs do not derail a claim. If you are using third-party funding, ATE will almost always be part of the conversation.

4. When the Case Is Contingent on Expert Evidence

Some claims stand or fall on the strength of expert reports. These reports are costly, and if the expert evidence is not accepted by the court, the claimant risks losing the entire case. ATE insurance can cover these disbursements, reducing the financial pressure.

5. When Facing a Well-Resourced Opponent

Large corporations, insurers, and government bodies often have deep pockets to fund lengthy litigation. Claimants without ATE may feel outmatched. Having cover in place gives claimants confidence that they can compete on fairer terms, even against powerful opponents.

What Does ATE Insurance Cover?

While the scope can vary between policies, ATE insurance generally covers:

• Opponent’s legal costs if the claimant loses.
• Claimant’s own disbursements (court fees, medical reports, expert witness fees).
• Counsel’s fees in certain cases.

Premiums are usually deferred and contingent, meaning claimants don’t pay upfront. Instead, the premium is only due if the case succeeds and is often recovered as part of the costs award. This makes ATE accessible to those who might not otherwise afford it.

Common Misconceptions About ATE Insurance

Despite its value, many claimants hesitate to take out ATE insurance because of myths and misunderstandings. Let’s address a few:

1. “It’s only for big cases.” Not true. ATE can be arranged for lower-value claims where the claimant simply cannot risk adverse costs.
2. “It’s too expensive.” Since premiums are contingent and often recoverable from the opponent, the cost is manageable. Insurers also assess risk carefully, so policies are priced fairly against the claim’s prospects.
3. “It shows a lack of confidence in the case.” In reality, the opposite is true. Insurers will only offer ATE where there is a reasonable prospect of success. Securing cover can actually reinforce confidence in a case’s strength.

How to Decide If ATE Insurance Is Right for You

If you are considering litigation, here are some questions to ask:

• Can you afford to lose and pay the opponent’s costs?
• Is your case high-value or complex, with uncertain outcomes?
• Are you relying on expert evidence or third-party funding?
• Would the financial risk discourage you from proceeding without protection?

If the answer to any of these is yes, then ATE insurance is worth serious consideration.

Practical Example: Individual Claimant vs. Large Insurer

A claimant pursuing a medical negligence case had strong evidence but faced the daunting prospect of taking on a large insurance-backed defence team. The estimated adverse costs if she lost exceeded £80,000—an impossible sum for her to cover. With ATE insurance in place, she could move forward without the fear of financial ruin. Eventually, the case settled favourably, and the premium was paid out of the settlement proceeds.

Conclusion: Should You Consider ATE Insurance?

Litigation is always a calculated risk. Even the best-prepared cases can face setbacks in court. ATE insurance gives claimants a safety net, making sure that if they lose, they are not left with crushing financial liabilities.

If you are an individual, a small business, or even a larger organisation facing litigation where the risk of adverse costs is significant, ATE insurance should be on your checklist. It can be the difference between confidently pursuing justice and walking away because the risk feels too high. Before making a decision, speak with your solicitor or a specialist broker. They can assess your case, explain policy options, and advise whether ATE is appropriate for your situation.

If you are considering litigation and want to understand how After The Event insurance can protect you, consult our legal adviser early in the process. Getting the right cover at the right time ensures you can pursue your case with confidence.