When considering commencing a court action, it is essential to weigh up all of the potential costs that may be involved. It is also important to factor in the possibility of being unsuccessful, which can bring about additional costs, such as paying others legal expenses. It is the fear of these costs that can prevent potential pursuers from initiating claims. This can even be the case when the chances of success are high.
After the Event insurance (also known as ATE) is an option available to address the concern of legal costs. Despite being an option for some time, it has never been a particularly popular one. The main reason for this is that such insurance used to be difficult to obtain. However, since autumn 2011 a new form of ATE insurance has been available, making it a more accessible and affordable option. Some of the key features of the ATE cover are:
- Cover is only available to pursuers of a claim.
- Cover is available for most commercial disputes.
- The only costs not covered are the claimant’s own legal fees.
- If original cover is not enough, it is possible to apply to top up through additional cover.
- If a claim has already started, there is an option to backdate cover but this could carry a more expensive premium.
Benefits of ATE Cover
The main benefits of ATE cover become most apparent when contemplating the payment of the premiums. The first main advantage is that the premium is only payable at the end of a case. The second main advantage is that the premium is only payable in the event of a successful case. The reason for this is because the premium is expected to be paid from either court awards or settlements. It is these advantages that make ATE insurance an appealing option to consider.
Limits of ATE Cover
Whilst ATE insurance has become a more accessible and affordable option in recent years, this does not mean that it can be used as an invitation to start legal proceedings haphazardly, without any fear of financial loss. Regulations have been put in place to avoid the insurance from being abused.
The application has to include a statement from a solicitor, which will only be written after an initial investigation of the case in question. It is the outcome of this statement that determines eligibility for the cover. Only claims that are deemed to have a success rate of 51% or higher will be considered for cover.
It is a combination of these benefits and limits that highlight ATE insurance as a worthwhile option to consider when thinking about commencing legal action. However, it is important to note that not all claims will be eligible. The main aim of the insurance is to provide security to those claimants who have a high chance of success but are unable to move the legal action forward due to concerns about fees. The purpose of the cover is not to provide security to any and all claimants regardless of success rate.