ATE Insurance for Small Businesses UK: A Practical Guide

Overview

After the Event insurance is a policy taken out once a dispute has already arisen, or is clearly on the horizon. Its main purpose is to protect the policyholder from certain costs if the claim does not succeed. That typically includes the opponent's legal costs (which the losing party is usually ordered to pay under the general costs rule in civil litigation) and some of your own disbursements, such as court fees, barristers' fees and expert reports.

The premium itself is often deferred and contingent, meaning it only becomes payable if the case is won, though the exact terms vary between insurers and policies. ATE is distinct from Before the Event (BTE) insurance, which is bought in advance as part of a commercial or professional policy and may already cover certain types of legal disputes.

ATE is most commonly paired with a Conditional Fee Agreement (a 'no win, no fee' arrangement) or a Damages-Based Agreement, giving a small business a fuller funding package when cash flow is tight.

Key steps

1. Work out what the dispute is really about. Before looking at insurance, get a clear picture of the claim: who the parties are, what is being argued, the likely value, and any deadlines. Insurers will want to understand the merits, so the clearer you are about the facts and the evidence, the easier the next steps become.
2. Check any existing cover first. Review your commercial insurance, professional indemnity policy and any trade body memberships for Before the Event legal expenses cover. If BTE cover applies to this type of dispute, it can often be used ahead of buying ATE, which may reduce or remove the need for a separate policy altogether.
3. Choose a funding structure that fits. Speak with your solicitor about how the case could be funded, whether that's a Conditional Fee Agreement, a Damages-Based Agreement, private payment, third party litigation funding, or a mix. ATE insurance tends to work best when combined with one of these, so the funding plan should be looked at as a whole.
4. Approach an ATE insurer with a proper case summary. Insurers will typically want a written assessment of prospects, a costs budget and key documents before offering terms. A well-prepared submission makes it more likely you will get competitive terms, and it gives you a realistic view of premium levels and any policy exclusions.
5. Read the policy carefully before committing. Look closely at what is and isn't covered, the limit of indemnity, what happens if you settle, what happens if you discontinue, and how the premium is paid. Make sure the cover limit is high enough for the opponent's likely costs as well as your own disbursements, not just one or the other.