What is After the Event insurance?
As the name suggests, After The Event (ATE) insurance is purchased after an event. In terms of personal injury, ATE cover may be sold to someone after their accident and when a claim begins.
Taking out an ATE insurance policy can provide further assurances on top of a standard No Win No Fee agreement. For example, by ensuring the claimant never has the personal responsibility of having to pay court or defendant fees in the unlikely event their claim did go to court.
However, a solicitor should carefully consider whether their claimant really needs that cover. Any that requires claimants to take out an ATE policy at the start of a claim may not be acting in their best interest.
In this article, we’ll look at how ATE may be used in personal injury compensation claims. Sometimes, such cover may be deemed an appropriate safety net for claimants. But do you really need to be sold ATE insurance at the outset of your claim? We’ll explain how this is often an outdated view, and a pointless cost burden for claimants.
Why you now pay for ATE in personal injury claims
In the past, claimants had no need to worry about whether they needed ATE cover. This was because claimants could recover ALL costs from a defendant should they succeed with their claim. Furthermore, the No Win No Fee service guaranteed that they’d have no cost liabilities if their claim failed.
However, changes to personal injury claims in England & Wales with the LASPO Act 2012 removed the right of a successful claimant to recover the cost of ATE insurance policies. This meant that claimants would have to pay the cost of any ATE insurance from their settlement if they won. That’s in addition to contributing a percentage of their settlement towards their legal costs.
Our solicitors were against the changes in the LASPO Act, and felt it was unfair that claimants had to contribute anything from their settlement if they won. We argued that insurers should be covering the costs of the claimant when they admit liability in a claim. However, the Government sided with the insurance lobby, and the new legislation was introduced.
Why we don’t routinely recommend After the Event insurance
When the LASPO Act came in, Direct2Compensation decided that we would minimise our claimants’ financial exposure to the new rules. We identified that ATE cover was one burden they could be free of.
This is because ATE is not needed for the vast majority of personal injury claims. Most are settled out of court, and will usually unfold in one of two ways:
- Either the claimant solicitor will reach a conclusion that the defendant’s denial is robust and the courts would not judge differently – in which case they simply close the claim and the claimant pays no fee.
- Or the defendants realise that they cannot defend the claim, that they are liable and the courts would not find differently – in which case negotiations between the solicitor and defendants reach an agreement on claim value, and appropriate settlement will be completed.
In either scenario, ATE is not required.
As most claims don’t go to court, there is usually no benefit for a claimant to agree to an ATE policy. In almost all cases, our solicitors will not recommend that you take ATE cover at the outset of your claim. It may well be a totally pointless cost burden.
Why and when you may need ATE cover
There are certain scenarios where a solicitor may view that the benefits of ATE cover outweigh the cost burden. This is usually in cases of a higher value or more complex nature, where having suitable ATE insurance cover in place allows the solicitor to take the ‘risk’ of court proceedings for their claimant.
For example, where a defendant is steadfastly refusing to make a sensible offer to settle, a solicitor could expect a judge to rule that a higher settlement is fairly due. As such, it would be worth going to court to maximise the settlement.
Conversely, if a judge decided to rule in favour of the defendant, having ATE cover in place would mean the claimant didn’t have to pay for the court fees or the defendant’s legal costs.
It’s important to remember that if the claim does fail, the claimant should not have to pay the ATE insurance premium. It’s only paid if the claimant were to succeed with their claim. Furthermore, the cost should be deducted from the settlement rather than paid for at the start.
When should ATE insurance be purchased?
Direct2Compensation and our solicitors believe there is no need to force a claimant to take out ATE cover from the outset. If the situation changes, and such cover may be of benefit, it can always be taken out at a later stage. Therefore, whether to provide such cover is an issue our solicitors will consider carefully throughout the process. If deemed necessary, our solicitors will review this with you at the appropriate time.
You may already have ATE cover in place
Sometimes claimants already have something similar to ATE cover in place without knowing it. For example, through Before the Event (BTE) or Legal Expenses Insurance (LEI) cover.
Such cover can often be found attached to home and contents, or motor insurance. Also through trade union membership and financial products such as credit cards and loans. Where possible, you can use this instead of ATE without any further cost. Furthermore, your no claims bonus should not be affected and renewal premiums should not increase.
We will always help to identify if you have any existing cover that may be of use. Where there is no existing BTE or LEI, our solicitors can recommend a suitable ATE insurance policy for your claim. But only if they are of the view that you may benefit from such cover.
Who pays the cost of ATE insurance?
If a solicitor is of the view that ATE cover would be beneficial, it is they who will purchase it on behalf of the claimant.
The claimant only pays back the cost of ATE insurance if and when they win their claim. The cost is deducted from the settlement awarded, so claimants should never have to pay for it upfront.
How much does ATE cover cost?
There are various types of ATE cover available for different personal injury claims. A solicitor will identify what level of cover you may need depending on the claim being pursued. Premiums start at around £100, but most range from £200 to £400. Where greater cover is needed, in more complex or risky claims such as clinical negligence, for example, this can increase to thousands of pounds.
However, the cost of ATE insurance should only form a small percentage of your entire settlement value. In cases where premiums are high, the potential compensation settlement awarded is likely to be far higher as well.
We’re on your side
Our solicitors will only recommend taking out ATE cover if it’s in your best interest. In the majority of claims, where you are unlikely to lose, there is no need for ATE insurance at all.
If they take the view that ATE cover is needed, they will select the right type of cover and one that represents value for money.
With Direct2Compensation, any deductions from your settlement are minimised and as such, we offer the most cost effective service for your personal injury claim.
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