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As the name suggests, After The Event (ATE) insurance is purchased after an accident has happened and when a claim for personal injury compensation begins. Taking out an ATE insurance policy can guarantee that the claimant never has the personal responsibility of having to pay costs should their claim fail to succeed, as it would cover legal costs and expenses in any litigation or claim dispute.
In this article, we look at how ATE can be used in personal injury compensation, and how such cover may be deemed an appropriate safety net for certain claimants looking to make a claim.
ATE in personal injury claims
In the past, a claimant could recover ALL costs from a defendant should they succeed with their claim. However, with the LASPO Act 2012 the Government changed the legislation regarding this and removed the right to recover the cost for ATE insurance. As such, Solicitors now need to carefully consider whether providing ATE cover is a pointless cost burden – the claimant doesn’t pay anything if they don’t succeed, but will have to cover the cost of the policy if they win.
A Solicitor may now decide that there is no benefit to a claimant by providing such cover as they may instead simply opt to close a claim should a defendant mount a robust defence at the first opportunity, thus ending the prospect of a claimant facing various solicitor or defendant costs if their claim fails at a later stage.
In cases where it is felt that the merits of having such cover outweigh the need to remove the cost burden (usually in cases of a higher value or complex nature), having suitable ATE insurance cover in place can guarantee that the claimant pays no cost whatsoever to any party if their claim fails. As the cost of any ATE premium is only paid if a claimant were to succeed with their claim, providing such cover for a claimant is an issue a solicitor will consider carefully when evaluating the case at the outset.
When should ATE insurance be purchased?
In the majority of cases, our solicitors are likely to advise that you have no requirement to purchase ATE cover, especially if you already have existing Before the Event (BTE) or Legal Expenses Insurance (LEI) cover in place.
Such cover can often be found attached to home and contents insurance, motor insurance, trade union membership and financial products such as credit cards and loans. Where possible, you can use any cover that you already have in place. In cases where there is no existing BTE or LEI, our solicitors will recommend a suitable ATE insurance policy for your claim.
If the initial evaluation of your case indicates that it would be prudent and beneficial to your claim to have suitable ATE cover in place, our solicitors will source the correct policy for you. The claimant will not have to pay any costs for the policy should their claim fail, but the premium will be deducted from settlement (as well as the up to 25% deduction) should you succeed.
It may also be possible to obtain ATE cover at a later stage in the claims process and our solicitors will review this with you at the appropriate time.
Who pays the cost of ATE insurance?
If a solicitor is of the view that such cover is beneficial, it is the solicitor who will purchase an ATE insurance policy on behalf of the claimant if they do not already have a suitable alternative BTE or LEI cover in place.
You only pay them back for ATE insurance if and when you win your claim. As a result of the LASPO Act 2012, successful claimants who win their claim for personal injury compensation can no longer charge the cost of their ATE premium to the losing side. Instead, it is deducted from any settlement awarded when a claim succeeds.
Remember, you should never have to pay any upfront cost for ATE insurance cover if your solicitor recommends you require it. With Direct2Compensation, any deductions from your settlement are minimised and as such, the most cost effective policy for your personal injury claim will be purchased.
In cases where ATE premiums are higher, the potential compensation settlement awarded is likely to be far higher as well. Therefore, the ATE premium will only form a small percentage of your entire settlement and your Solicitor will ensure that you are given the appropriate cover that will represent good value for money and of benefit to your claim.
How much does ATE cover cost?
As the vast majority of ATE insurance cover will be obtained at the outset of the claims process, standard policies with various cover are available for different types of personal injury claims. Whilst each case needs to be decided on merit, our specialist solicitors can usually identify what level of cover you are likely to require when they first discuss your claim with you.
The level of cover required will vary depending on the kind of claim you are wishing to pursue. In less risky claims, such as straightforward matters where you are unlikely to lose, your solicitor is unlikely to recommend ATE insurance at all. However, if they do, premiums for such cover can start at around £100. In more risky claims, such as clinical negligence, cover can become more expensive as the likelihood of the claim failing increases. Whilst the majority of ATE premiums will range from £200 – £400, policies in some cases can be far higher where greater cover is needed and can run into thousands of pounds. However, this will only be the case in high value claims where any such cost would be a tiny deduction from settlement.