ATE Insurance UK: Legal Framework & Regulation

Overview

ATE insurance is a policy bought after a legal dispute has arisen, usually once you know you are going to litigate or have already started. Unlike Before the Event cover, which is typically bundled with home or motor policies, ATE is purchased for a particular piece of litigation.

It is designed to protect the policyholder against adverse costs orders (the other side's legal costs if you lose) and often against disbursements such as court fees, expert reports, and counsel's fees. Premiums are commonly deferred and contingent, meaning you only pay the full premium if the case succeeds, though this depends entirely on the policy wording.

ATE is commonly used alongside a Conditional Fee Agreement or Damages-Based Agreement with a solicitor, and it is regulated as a general insurance product in the UK. That means the provider must be authorised, the policy must be transparent, and certain statutory duties apply to both sides of the contract.

Key steps

1. Check the insurer is FCA authorised. Before you commit to any ATE policy, look up the provider on the Financial Conduct Authority register. Only authorised firms can legally sell general insurance in the UK, and the register confirms the permissions a firm holds. If your solicitor is recommending an insurer, it is reasonable to ask why and to see the FCA reference number.
2. Read the scope of cover carefully. Policies vary more than people expect. Check what is covered (adverse costs, own disbursements, counsel's fees), what the indemnity limit is, and what is excluded. Some policies only respond in certain procedural situations, so the detail of what triggers a payout matters far more than the headline promise of cover.
3. Understand the premium structure. Find out whether the premium is deferred, self-insured, or payable up front, and whether it is staged (rising as the case progresses to trial). Ask what happens to the premium if you settle early, if you discontinue, or if the case is struck out. The answer should be clearly set out in the policy schedule.
4. Comply with the duty of fair presentation. Under the Insurance Act 2015 you must disclose every material circumstance you know, or ought to know, about the claim. That includes weaknesses, prior offers, and anything that might influence a prudent insurer. Getting this wrong can entitle the insurer to avoid the policy or reduce the payout, so take the disclosure step seriously.
5. Keep the insurer informed as the case develops. Most ATE policies include ongoing conditions: notify the insurer of Part 36 offers, significant procedural developments, changes in prospects of success, and settlement discussions. Failing to keep the insurer in the loop is one of the most common reasons claims on ATE policies run into trouble later on.