ATE insurance: an overview
Category: Litigation risk and costs · Reviewed by the Apex broking team · Last reviewed 2026-08-22 · ~5 min read
Category: Litigation risk and costs
Also known as: after-the-event insurance, ATE, litigation costs insurance
Related concepts: after-the-event insurance in professional negligence, conditional fee agreements
Definition
After-the-event insurance, universally ATE, is a policy taken out after a cause of action has accrued or a dispute has arisen. It typically indemnifies the insured against a liability to pay the opponent’s costs if the claim or defence fails, and often against the insured’s own disbursements such as expert fees and court fees. It is distinct from before-the-event legal expenses cover, which is bought in advance of any dispute as part of a commercial or personal package.
What a policy usually covers
The core cover is adverse costs. Beyond that, wordings differ considerably: some cover own disbursements only, some cover own disbursements and adverse costs, some are staged so that the premium increases at defined litigation milestones, and some are deferred and contingent so that no premium is payable unless the case succeeds. Common features include a duty to act on and follow counsel’s advice on prospects, a requirement to notify and to obtain consent before settling, and avoidance or cancellation rights if prospects fall below a stated threshold.
The post-LASPO position on recoverability
Section 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 inserted a new section 58C into the Courts and Legal Services Act 1990. Its effect is that a costs order in favour of a party who has taken out a costs insurance policy may not include provision requiring payment of an amount in respect of all or part of the premium, unless such provision is permitted by regulations. Section 46 was commenced for general purposes on 1 April 2013 by S.I. 2013/77, with exceptions for certain categories of proceedings. Further commencement followed on 6 April 2016 under S.I. 2016/345, with exceptions retained for mesothelioma claims and for publication and privacy proceedings. The general rule since 2013 is therefore that ATE premiums are a cost of running the case, borne by the insured, not shifted to the losing party.
The clinical negligence exception
The regulations contemplated by section 58C are the Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No. 2) Regulations 2013 (S.I. 2013/739). They permit recovery of a premium, but only in clinical negligence proceedings, only where the financial value of the claim exceeds £1,000, and only in respect of the part of the premium that insures against the risk of incurring a liability to pay for an expert report or reports relating to liability or causation in respect of clinical negligence. The exception is therefore much narrower than it is sometimes described: it is not a general recoverability carve-out for clinical negligence, but a carve-out for the liability and causation expert-report element of the premium.
How ATE interacts with funding
ATE is normally arranged alongside a conditional fee agreement, a damages-based agreement or third-party litigation funding, and the pieces have to fit. Qualified one-way costs shifting in personal injury claims reduces the adverse costs exposure and therefore the need for ATE in that field, but the protection is not absolute and falls away in the situations set out in the Civil Procedure Rules. In commercial litigation, where there is no costs shifting protection, ATE remains the principal way of capping the downside.
ATE as security for costs
An ATE policy is frequently offered to a defendant, or to the court, as an answer to an application for security for costs. Whether it is adequate depends on whether the defendant can actually get at the proceeds: the risk is that the insurer avoids or cancels for something the claimant has done, leaving the defendant with nothing. The market answer is an anti-avoidance endorsement or a deed of indemnity in favour of the defendant, cutting off the insurer’s avoidance rights as against that defendant. That subject is dealt with in the companion entry on security for costs and insurance.
Practical points for a commercial buyer
Read the avoidance and cancellation provisions first, because they determine whether the policy is worth anything at the moment it is needed. Check whether the premium is deferred and contingent, and what happens on discontinuance. Check the consent-to-settle machinery against how the case is likely to be run. And be clear that, outside the narrow clinical negligence exception, the premium is not coming back from the other side.
Why it matters
ATE turns an open-ended litigation downside into a known cost. Since 2013 that cost sits with the party buying it, which changes the economics of pursuing marginal claims and makes the terms of the policy — not just its existence — a live commercial question.
Frequently asked questions
Can we recover an ATE premium from the losing side?
Generally no. Section 46 of LASPO 2012 inserted section 58C into the Courts and Legal Services Act 1990, which prevents a costs order including the premium unless regulations permit it. The general rule has applied since 1 April 2013, with limited commencement exceptions for mesothelioma and for publication and privacy proceedings.
What is the clinical negligence exception?
The Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No. 2) Regulations 2013 allow recovery only in clinical negligence proceedings, only where the claim value exceeds £1,000, and only for the part of the premium insuring the risk of liability to pay for expert reports relating to liability or causation.
Is ATE the same as before-the-event legal expenses cover?
No. Before-the-event cover is bought before any dispute exists, usually as part of a wider package. ATE is bought once the dispute has arisen and is underwritten on the merits of that specific case, which is why prospects conditions and consent-to-settle clauses are central to it.
Related entries
- After-the-event insurance in professional negligence
- Conditional fee agreements post-LASPO
- Damages-based agreements
- Security for costs and insurance
- Fundamental dishonesty
This entry is part of the Apex Insurance Wiki. Last reviewed 2026-08-22. Next review: 2027-02-22. It is insurance information, not legal advice, and it states the position as at August 2026.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.