Category: Insurance definitions · Reviewed by Mark Fox, Broker · Renewals · Last reviewed May 2026
A wasted costs order is a court order made personally against a legal representative — a solicitor, barrister or licensed conveyancer — requiring them to pay costs that have been wasted by their improper, unreasonable or negligent conduct of litigation. Most UK solicitors’ PI policies respond to wasted costs orders, but cover is conditional on the underlying conduct not falling within dishonesty or wilful misconduct exclusions.
The court’s power to make a wasted costs order against a legal representative comes from section 51(6) of the Senior Courts Act 1981 and is amplified by CPR Part 46.8 and the practice direction at PD 46. The statutory test is conduct that has been “improper, unreasonable or negligent” and that has caused costs to be wasted. The order is personal to the legal representative — not the client and not the firm in the sense of vicarious liability for a client’s costs liability — although in practice the firm pays and the partners stand behind the order.
Wasted costs orders are rare in absolute terms but consequential when made. They carry reputational weight, may require reporting to the SRA, and can drive premium loadings at renewal. The order can be made on the application of an opposing party or on the court’s own motion, and the legal representative is given an opportunity to be heard before the order is finalised.
For PI insurance purposes, the relevant question is whether the policy responds — to the costs ordered, to the defence costs of resisting the application, or to both.
Most solicitors’ PI policies in the UK respond to wasted costs orders within the policy’s general civil liability cover, subject to two qualifications:
The underlying conduct must not be excluded. Where the wasted costs order is based on conduct that amounts to dishonesty or wilful misconduct, the policy’s dishonesty exclusion may bite. Most SRA MTC-compliant wordings carve back cover for innocent partners where dishonesty is found in another partner — but the dishonest individual themselves is not indemnified. See dishonesty extension.
The order must arise from professional services. Wasted costs orders almost always arise from the conduct of litigation, which is professional services. Cover follows. A wasted costs order arising from non-professional conduct (rare) would fall outside the scope of the cover entirely.
The SRA’s minimum terms and conditions (MTC) require solicitors’ qualifying PI to indemnify the insured in respect of civil liability arising from their practice. Wasted costs orders, being civil liability arising from the conduct of litigation, fall squarely within that wording in most cases. The MTC require cover for defence costs whether or not the underlying claim succeeds, so the costs of resisting a wasted costs application are typically covered even if the application ultimately succeeds.
Defence costs treatment varies. Under SRA MTC-compliant primary cover, defence costs are paid in addition to the £2m or £3m minimum limit (i.e. outside the limit) under the MTC requirements. Above-MTC layers and non-solicitor PI policies should be read for whether defence costs sit inside or outside the limit. See defence costs inside vs outside the limit.
Consider a mid-sized Bristol litigation firm with £3m of SRA MTC-compliant PI cover and a £25,000 excess. In a commercial dispute, the firm fails to comply with multiple directions, including a critical disclosure order. The opposing party applies for a wasted costs order under section 51, claiming £85,000 in costs they say were thrown away because of repeat hearings, abortive preparation and an adjourned trial.
The application is contested. The firm’s defence runs in two parts: first, that the conduct was not “improper, unreasonable or negligent” within the statutory test (case management failures alone do not always meet the threshold); second, that even if the threshold is met, causation is not established for the full £85,000 — much of the work would have been needed anyway.
Costs analysis:
Total insured outlay: roughly £45,000 (defence plus settlement). Total firm outlay: £25,000 excess plus any uninsured regulatory cost. The figures are illustrative; real wasted costs applications vary widely in scale and outcome.
Wasted costs exposure matters most in three situations:
Litigation-heavy practices. Firms with a high volume of contentious work — commercial litigation, family, personal injury, immigration — carry materially higher exposure to wasted costs applications than transactional practices. Renewal underwriters look at the contentious-to-non-contentious mix as part of the risk picture.
Case management failures. The largest single category of wasted costs applications relates to repeated breaches of court directions, late service of evidence, or unjustified adjournments. Internal file supervision and diary controls are the primary defence against the application ever being made.
Cases with personal allegations. Where the wasted costs application alleges that an individual lawyer acted improperly or dishonestly, the case is no longer ordinary case management litigation. Personal involvement of partners, separate representation considerations and potential SRA referral all come into play. Insurer panel solicitors should be involved early.
UK PI policies cover wasted costs in a range of ways. Look for:
Does my PI policy cover a wasted costs order?
Most UK solicitors’ PI policies respond to wasted costs orders within their general civil liability cover, subject to the dishonesty and wilful misconduct exclusions. SRA MTC-compliant primary cover is required to indemnify civil liability arising from practice, and wasted costs orders typically fall within that. You should check the schedule and dishonesty wording.
Is a wasted costs order treated as a fine or penalty?
No. Fines and penalties are punitive sanctions imposed by regulators or criminal courts. A wasted costs order is a civil costs order in private litigation — a recovery of costs by an opposing party, not a fine. The fines and penalties exclusion in a PI policy does not bite on wasted costs.
Are the defence costs of resisting the application covered?
In most wordings, yes. The costs of resisting a wasted costs application are defence costs in the ordinary sense — costs incurred in defending an asserted civil liability. Under SRA MTC cover these sit outside the limit. Above-MTC and non-solicitor wordings should be checked for inside-vs-outside treatment.
Does the policy respond if the order is made against a partner personally?
Yes — partners are typically covered as insured persons under the policy definition. The order is against the legal representative personally, but the insured person is within the policy’s insured persons clause. The exception is where the partner’s conduct triggers a dishonesty or wilful misconduct exclusion against that individual.
Do I have to report a wasted costs application?
Most policies require notification of any “circumstance” that could give rise to a claim, which includes a wasted costs application. The notification clause should be read carefully — late notification can give the insurer grounds to apply remedies under the Insurance Act 2015. The SRA also requires firms to report material matters as part of their regulatory reporting obligations.
Is a wasted costs finding reportable to the SRA?
A wasted costs order against a solicitor is generally a reportable matter under the SRA Code of Conduct for Firms and the SRA’s reporting requirements. The threshold and the timing depend on the conduct underlying the order. Many firms engage regulatory counsel as soon as an application is contested, irrespective of outcome.
Can a wasted costs order trigger a renewal premium increase?
In practice, yes — wasted costs orders are a data point underwriters use at renewal. The effect on premium depends on the size of the order, the conduct involved, the firm’s overall claims history and the underwriting market. A single contested wasted costs application that is dismissed is unlikely to move premium significantly; a sequence of orders against the same firm will.
Are barristers’ wasted costs orders covered the same way?
Barristers are covered through the Bar Mutual Indemnity Fund (BMIF) rather than the open-market PI route. BMIF cover responds to wasted costs orders on broadly similar principles — civil liability arising from professional services — but the specific wording and the dishonesty carve-out should be read in the BMIF terms in force at the time.
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Apex Insurance Brokers Ltd is a Bristol-based insurance broker authorised and regulated by the Financial Conduct Authority (firm reference number 724952). The company is registered in England and Wales under Companies House number 07014570. Contact: info@apexinsurancebrokers.co.uk | 0117 325 0027.
Last reviewed: May 2026 by Apex Insurance Brokers Ltd.
Important: this article is general information, not advice on your specific circumstances. For advice on PI insurance for your firm, contact us on 0117 325 0027 or info@apexinsurancebrokers.co.uk.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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