ATE Insurance UK: How to Pick the Right Policy

What this document is

ATE insurance is a policy taken out after a dispute has already arisen, designed to protect a claimant (or sometimes a defendant) from the financial fallout if the case is lost. In England and Wales, the losing party in civil litigation is generally ordered to pay a significant portion of the winner's legal costs.

That exposure, often called adverse costs, is what keeps most people awake at night when they are weighing up whether to sue. ATE policies typically respond to that risk, and many also cover disbursements such as court fees, expert reports, barristers' fees and other out-of-pocket costs incurred while running the case.

Cover is usually arranged through a solicitor, and the premium is often deferred and self-insured, meaning you only pay if you win. Since the Jackson reforms in 2013, ATE premiums are generally no longer recoverable from the losing side (with limited exceptions, such as certain clinical negligence claims for expert reports), so the premium effectively comes out of any damages you recover. Understanding that trade-off is central to picking sensibly.

How to use this document

1. Get clear on what you are actually insuring against. Write down the worst-case financial outcome of your claim. That means the other side's costs if you lose at trial, plus your own disbursements, plus any interim costs orders along the way. Without a realistic number, you cannot judge whether a policy's limit is genuinely enough or just comforting on paper.
2. Match the indemnity limit to the real shape of the case. Policies are sold with a headline sum insured, but costs in litigation tend to creep upwards, especially if the matter goes to trial or involves expert evidence. Ask your solicitor for a costs budget projection and make sure the limit comfortably exceeds it, with a sensible buffer for escalation or appeals.
3. Read the exclusions line by line, not the summary. Every ATE policy carves out situations it will not cover. Common exclusions include discontinuing the claim without insurer consent, rejecting a Part 36 offer the insurer considered reasonable, or material non-disclosure when the policy was taken out. These clauses can void cover at the worst possible moment, so understand them before signing.
4. Compare premium structures honestly. Some premiums are staged, rising as the case progresses through pre-action, issue and trial. Others are flat. Deferred and contingent premiums (payable only on a win) look attractive but may be larger overall. Ask for the total cost in each scenario, and weigh that against how likely each scenario is based on what your solicitor tells you.
5. Check the insurer's track record and regulation. ATE cover is only as strong as the company standing behind it. Look at whether the insurer is authorised by the Financial Conduct Authority, whether they have a history of paying out cleanly, and how they handle disputes with policyholders. A cheap premium from a shaky provider is not a bargain.