Commercial after-the-event insurance is a type of legal expenses insurance cover designed to protect businesses and claimants from the financial risks associated with litigation. It is typically purchased after a legal dispute has arisen and covers adverse costs. This typically includes opponents’ legal fees and disbursements in the event of an unsuccessful claim.

In the UK, ATE insurance is particularly relevant for commercial litigation as it offers claimants a way to manage the financial risks of pursuing a case. It is often used alongside conditional fee agreements (CFAs), damages-based agreements (DBAs), or third party funding to provide comprehensive cost protection.

Annecto Legal fills the gaps when clients need access to the best legal advice on any commercial dispute. It removes financial uncertainties and unforeseen legal expenses at a low cost.

What is commercial ATE insurance?

After the event (ATE) insurance is taken out after the event that has led to a dispute has taken place. This could be after professional negligence has taken place, or a contract dispute has arisen, for example. ATE insurance can protect you from the risk of having to pay the other side’s costs should your claim not be successful. It can also be used to provide Security for Costs should your opponent make such an application, and is more cost-effective than posting cash at court.

Commercial ATE insurance is perhaps best thought of as a form of ‘swap’: For either no upfront fee or a small upfront fee, the insurer takes on the risk of a potential adverse costs award. The client will have swapped their obligation to pay the defendants in the event of a loss with the obligation to pay the insurer in the event of a win. This is generally an attractive swap as the client is likely to be in a better financial position following a win than following a loss, and the payment to the insurer will only be a percentage of the adverse costs rather than the whole amount.

The actual amount the client will pay for the insurance will depend on how long it takes to settle the case: An early settlement and the client could pay as little as 10-20% of the amount insured (the adverse costs) as an ATE premium. If the case goes to trial, it is more likely to be in the 40% to 65% range (depending on the insurer and the case) of the amount insured.

What are the benefits of commercial ATE insurance?

Beyond financial protection, ATE insurance can also strengthen a claimant’s negotiating position. The presence of an insurance policy signals to the opposing party that the claimant has financial backing and is prepared to see the case through, making it more likely that the opponent will offer a fair settlement rather than risk prolonged litigation.

Another key feature of ATE insurance is that the premium is often structured in a way that minimises upfront costs. Many policies are offered on a deferred basis, meaning the premium is only payable at the conclusion of the case and is often contingent on a successful outcome. If the case is lost, the insured party is not required to pay the premium, making ATE insurance an attractive option for claimants concerned about the financial risks of litigation.

Who can Annecto Legal assist with commercial ATE insurance?

While ATE insurance is most commonly sought by claimants, it is available to any party involved in litigation, including defendants and third parties. This type of insurance is particularly beneficial for those with limited financial resources who may otherwise struggle to cover an adverse costs order.

Solicitors can also secure ATE insurance on behalf of their clients, as many individuals and businesses rely on their legal advisors to guide them through the complexities of litigation funding and insurance. However, many solicitors may not be fully equipped to provide in-depth advice needed to help clients make well-informed decisions.

Annecto Legal is committed to supporting solicitors and law firms in navigating this challenging landscape, offering a professional service at competitive market rates.

For small businesses, ATE insurance can be crucial in ensuring they are not forced to concede early or accept an unfavourable settlement simply due to the risk of mounting legal costs. By providing financial protection, it enables them to stand on equal footing with better-resourced opponents.

From large companies to small business owners, Annecto Legal helps clients access justice while mitigating financial risk, ensuring that legal costs do not become a barrier to pursuing legitimate claims.

How can Annecto Legal assist?

Annecto Legal assists clients in unlocking the full potential of their commercial litigation claims. The process of applying for commercial ATE insurance, obtaining quotes, and understanding cost and premium structures can be highly complex. To ensure you receive the right guidance, we encourage you to reach out to our team as early as possible.

Our services are tailored to a diverse range of clients, including businesses, solicitors, commercial insurance brokers, individuals, insolvency practitioners, and liquidators.

Contact one of our expert team members today to learn about commercial ATE insurance and discover the most suitable litigation funding solution for your needs.