The litigation insurance landscape can be complex, in particular that of ATE insurance. Here is a series of Q&As to some of the most commonly asked questions about after-the-event (ATE) insurance.
What are the main types of After-the Event (ATE) insurance premiums/fees?
Paid or Upfront premium:
Payable on inception of the ATE policy or at key stages throughout the litigation. This type of premium once paid is normally non-refundable.
Supplemental Premium:
A one stage premium which is only payable if a case or group of cases is successful
Contingent Premium:
A multi stage premium discounted at key stages in the litigation and only payable if the case is successful.
Deed/Anti-Avoidance Endorsement Fee:
A fee payable to the relevant insurer for issuing a Deed of Indemnity or Endorsement. The fee is generally only payable when the Deed or AEE has been accepted as security by the defendant or court.
What is an After-the Event (ATE) insurance Portfolio Policy for law firms?
A portfolio insurance policy for a law firm provides comprehensive coverage for a group of cases a law firm is handling on behalf of clients. The firm takes out a single insurance policy that covers a selection of cases.
What is an Anti-Avoidance Endorsement (AEE) in the context of an After-the Event (ATE) insurance policy?
An Anti-Avoidance Endorsement (AEE) is an endorsement to an existing After-The-Event (ATE) insurance policy. The AAE protects the defendant(s) by indemnifying the legal costs incurred by them if there is a successful defence to the legal action and the defendant is awarded costs. Depending on the wording of the AAE, it typically gives the defendant(s) a direct legal route to enforce the indemnity.
AEEs are used in jurisdictions such as the UK and Australia to fulfill security for costs obligations. This serves as a potential alternative to the more conventional methods of providing security for costs.
What is a Deed of Indemnity (“DOI”) in commercial litigation?
A Deed of Indemnity is a supplementary agreement to an After the Event (ATE) insurance policy, established between the ATE insurer and the defendant in a legal action. In this agreement, the ATE insurer commits to indemnifying the defendant's legal costs up to a predetermined limit if the defendant successfully defends the legal action and is awarded costs. The fee for the deed is paid by the plaintiff (or litigation funder). A DOI is a potential alternative to traditional methods of providing security for costs.
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