What is ATE Insurance?

What Is After-the-Event (ATE) Insurance?

After-the-Event insurance (ATE insurance) is a specialized insurance policy taken out after a legal dispute or lawsuit has started, but before the final outcome is known. Its primary purpose is to protect the litigant (usually the plaintiff) from financial loss if the case is unsuccessful. If the insured party loses the case, the ATE policy will pay for adverse costs — typically the opponent’s legal fees that the losing party is required to pay, and often the insured’s own disbursements (like court fees, expert witness fees, and other out-of-pocket litigation expenses). In essence, ATE insurance ensures that even in a worst-case scenario (losing in court), the financial impact on the client and law firm is vastly reduced.

Some key points about ATE insurance:

“After the Event” means it is purchased after a dispute arises. This contrasts with “Before the Event” (BTE) legal expense insurance, which is bought before any specific legal issue exists (for example, as part of a business or home insurance policy). ATE is there to fill the gap if you didn’t have BTE coverage or if BTE doesn’t cover the situation at hand.
Legal Cost Protection: ATE policies are designed to cover legal costs ordered against the insured. In Canada’s loser-pays legal system, a losing plaintiff is usually required to pay a portion of the winning side’s costs. ATE insurance covers this liability, so your client (or your firm, if you’ve indemnified the client) isn’t stuck with a hefty bill from the opposing counsel. Many ATE policies also refund the insured for their disbursements (like expert reports, filing fees, medical assessments) if the case fails.
No Upfront Cost: Critically, ATE insurance is typically structured with a deferred premium – meaning your client doesn’t pay the insurance premium upfront. The premium is often only due if the case is won or settled favourably (it can be paid out of the settlement or award at the end). If the case is lost, the premium might be waived entirely (or substantially reduced), so there’s usually no financial burden if the litigation doesn’t succeed. This no-win-no-fee insurance model makes ATE very attractive to law firm clients.

In Canada, ATE insurance has become increasingly available over the past decade, following its widespread use in the UK and other jurisdictions. Licensed insurers (often through specialized brokers) offer ATE policies tailored to the Canadian legal environment. They take into account Canadian cost rules (which vary by province) and are available for a variety of case types relevant to Canadian law firms, which we’ll detail below. It’s important to note that ATE insurance in Canada is provided by licensed insurance companies and intermediaries, meaning it’s a regulated product that offers the backing and credibility of an insurer – rather than an informal arrangement or loan. This credibility can be reassuring not just for clients, but for law firms and even opposing parties during litigation.

Why Law Firms Are Embracing ATE Insurance

Managing partners and law firm owners in Canada are increasingly turning to ATE insurance as a strategic tool. Below are the major reasons why ATE insurance has become so valuable for law firms:

Risk Mitigation & Balance Sheet Protection: Litigation is inherently unpredictable. An otherwise strong case can be lost due to an unfavorable judge decision or an unpredictable jury. Without ATE insurance, a lost case can leave a firm’s client owing tens or even hundreds of thousands in opponent’s legal costs, not to mention unrecoverable disbursements the firm may have advanced. For the law firm, this can mean writing off significant expenses or facing a client who is unable to pay. ATE insurance transfers this financial risk to the insurer, protecting the firm’s balance sheet and the client’s finances. In practical terms, this means a loss in court doesn’t turn into a financial catastrophe – the insurer will cover the defined costs. Partners can take on meritorious cases without fearing that a single loss will impact the firm’s financial stability.
Enhanced Mediation and Settlement Leverage: One of the less obvious but powerful benefits of ATE insurance is the psychological and strategic leverage it provides in settlement negotiations and mediations. When the opposing side knows your client has an ATE policy in place, they understand that you’re not afraid to go to trial – because even if you lose, the insurance covers their costs. This knowledge can deter low-ball settlement offers. Essentially, ATE insurance removes the opponent’s ability to pressure your client into settling cheaply out of fear of a devastating cost award. Your firm can negotiate from a position of strength, which often leads to more favorable settlements. The presence of ATE coverage “levels the playing field” – especially when you’re up against a well-funded defendant or insurance company on the other side.
Client Confidence and Access to Justice: From the client’s perspective (be it an individual or a corporate client), knowing that an insurance company will cover adverse costs if the case fails is hugely reassuring. It provides peace of mind and the confidence to pursue justice even against deep-pocketed opponents. Many valid legal claims never get pursued – or are abandoned early – because the financial risk is too high. By removing the fear of a crippling cost order, ATE insurance enables clients to seek justice on the merits of their case, not just their financial ability to withstand a loss. This is a compelling selling point for law firm business development: you can tell clients that you have a solution to protect them from ruinous costs. It enhances trust because the client sees that the firm is proactive in shielding their interests. In contingency-fee matters, it can also assure the client that even if they won’t owe legal fees on a loss (typical in contingency arrangements), they also won’t owe the opponent’s fees – truly “nothing to lose” in financial terms.
Competitive Differentiation & Firm Growth: Offering ATE insurance as part of your firm’s service can distinguish your firm from competitors. It signals that your firm is forward-thinking and truly client-centric, providing comprehensive risk management in addition to legal representation. Managing partners have noted that having an ATE insurance option helps in marketing and client acquisition – prospective clients feel safer engaging a firm that has an insurance solution for litigation costs. Moreover, ATE can enable your firm to take on bigger cases or more cases than you otherwise might. For example, a smaller firm might shy away from a complex case with high disbursement costs or potential adverse costs, but with ATE coverage in place, the firm can proceed without putting its finances on the line. This means growth in practice areas like personal injury, class actions, or commercial litigation because the downside risk is capped. In essence, ATE insurance lets you grow boldly but responsibly – pursuing opportunities while containing the potential downsides.
Credibility and Professionalism: By working with a licensed insurance brokerage and insurer to manage litigation risk, law firms show that they adhere to best practices and high professional standards. It’s an extra layer of credibility when you tell a client (or even a lender or insurer of your own) that your cases are backed by an ATE insurance policy. Internally, many firms treat ATE insurance as part of their risk management protocols, similar to how businesses use insurance for other operational risks. This professional approach can impress sophisticated clients such as corporations or institutional claimants. Additionally, should your firm need to secure litigation funding or pass court scrutiny (for example, when seeking court approval for a settlement in a class action or responding to a security for costs motion), having an ATE insurer behind you demonstrates confidence in the case’s merits.

Ultimately ATE insurance aligns with a law firm’s strategic goals: it protects financial interests, empowers better legal outcomes, and creates a competitive advantage in the market.

How Does ATE Insurance Work?

Understanding the mechanics of ATE insurance will help you explain it to clients and integrate it into your practice:

Obtaining a Policy: ATE insurance is typically arranged through a licensed broker or directly from a specialized legal insurer. In Canada, brokerages like ALIGNED Insurance work with insurers who offer ATE policies tailored to different types of litigation. The process usually starts with an application or proposal form where the law firm provides details about the case: the parties, the nature of the claim, estimated damages, legal merits, stage of proceedings, and an estimate of the adverse costs exposure and budgeted disbursements. The insurer uses this information to assess risk. They may ask for documentation like pleadings or opinions on merits. Not every case will qualify – insurers want a reasonable chance of success (often they might look for something like 60% or greater chance of success, though criteria vary). Once the insurer is satisfied, they will offer terms for coverage.
Coverage Amount (Limit): The policy will have a coverage limit, which is the maximum amount the insurer will pay in the event of a loss. Commonly, the limit is set to cover the expected adverse cost award plus a cushion, and potentially a portion of the plaintiff’s own disbursements. For example, if you estimate that losing at trial could lead to a cost order of $100,000 payable to the defendant and your disbursements are $50,000, you might seek an ATE policy limit of $150,000. It’s important to size the limit correctly. Many insurers allow the limit to be adjusted as the case progresses – if, say, the trial is extended or the opponent’s legal fees are mounting higher than initially expected, you can often increase the coverage (usually with a corresponding adjustment in premium). This flexibility ensures continuous protection even as litigation dynamics change.
Covered Costs: ATE policies in Canada usually cover:
- Opponent’s Legal Costs: If your client must pay the defendant’s party-and-party costs after losing, the policy pays that bill (up to the limit). This often includes a portion of their legal fees and possibly disbursements as awarded by the court.
- Your Disbursements: Many policies also reimburse your side’s disbursements (e.g., expert witness fees, court filing fees, medical reports, forensic analysis costs) if you lose the case. This is crucial for law firms that advance these expenses for clients – it means the firm recovers its out-of-pocket costs on a lost case, which can be significant.
- Indemnity for Adverse Costs Only (No Coverage for Your Fees): Generally, ATE does not cover the value of the lawyer’s own time or fees. In contingency fee cases, the lawyer’s fee is inherently contingent on success, and if working hourly, the client would still owe their own lawyer’s fees (though in practice, many lawyers might not pursue collection aggressively if the case is lost). ATE is focused on the external costs to prevent a double blow to the client (losing the case and owing the opponent’s costs).
When to Buy: ATE insurance can be purchased at various stages of litigation. Ideally, the earlier the better, often soon after filing the claim or early in the dispute once the basic facts are known. Obtaining it early maximizes protection (since any adverse cost exposure from day one is covered). However, it’s not uncommon to secure ATE insurance later – for example, before an expensive stage like expert testimony or trial, or even when a case is on appeal. Some insurers will even issue ATE policies mid-litigation or for appeals only. Retroactive coverage is sometimes available: this means the policy, once in force, can cover adverse costs orders made and disbursements incurred even prior to the purchase date, as long as they relate to the insured case. There are typically limits to this, but it addresses situations where a case has been ongoing and you realize belatedly that ATE insurance is needed.
Premium Structure: One of the hallmarks of ATE insurance is its unique premium arrangement:
- Deferred Payment: Unlike most insurance, you don’t pay the premium upfront. The premium payment is deferred until the end of the case.
- Conditional on Success: If the case is successful (your client wins or perhaps there’s a settlement in their favor), the premium becomes payable at that point. The idea is that it can be paid out of the proceeds of the case (e.g., from the damages or settlement money). If the case is lost, in many ATE arrangements, no premium is due at all. In some cases, insurers might charge a small application fee or an initial premium (sometimes called a deposit premium) to cover administrative costs or a portion of risk, but the larger bulk of the premium is contingent on success. This model ensures that the client isn’t out-of-pocket for the premium in a losing scenario – aligning with the very purpose of ATE (to avoid additional financial loss).
- Premium Amount: The cost of the premium will depend on the specifics of the case: the risk assessment of chances of winning, the amount of coverage needed, the type of case, and the stage at which the policy is taken. Premiums can be a flat fee or a percentage of the sum insured, or sometimes a percentage of the damages claimed. For example, an insurer might quote a premium that is 20% of the insurance coverage limit, payable upon success. Importantly, because the premium is only paid on success, it effectively comes out of the winning proceeds, and if you lose, the insurer gets nothing (hence they have to be confident in your case’s merit to offer a policy).
- No Impact if You Lose: To reiterate, if you lose the case, the insurer not only pays the defined costs, but you do not pay the premium. The insurer essentially writes it off. This aligns the insurer’s interest with the insured’s to some extent – they are motivated to insure good cases that are likely to win, and they also know that if it’s a close call, they will be paying out rather than collecting premium.
Claims Process: If the case is lost and there’s an order to pay the opponent’s costs (or you’ve incurred disbursements that now won’t be recoverable), a claim is made under the ATE policy. Typically, the law firm will notify the broker/insurer, provide the relevant court documents (e.g., the costs order, invoices for disbursements), and the insurer will directly indemnify those amounts up to the policy limit. This claims process is usually straightforward, especially since the context (litigation outcome) is clear-cut. If the case is won, then at that point the premium is due to be paid to the insurer (often the premium can be invoiced and paid out of the award or settlement before disbursing the net to the client).
Security for Costs Benefit: In some scenarios, having an ATE insurance policy can help satisfy a security for costs requirement. If a defendant brings a motion for security for costs (demanding that the plaintiff post money to cover potential costs because, for example, the plaintiff resides outside the jurisdiction or is a shell company), courts have sometimes accepted an ATE policy as sufficient security or a reason to reduce the amount of security required. The rationale is that the ATE insurer’s obligation to pay costs makes it unnecessary for the plaintiff to park cash in trust for security. This isn’t guaranteed in every case, but it’s a useful side-benefit: your ATE policy might help you avoid tying up funds in litigation.
Policy Duration and Cancellation: An ATE policy generally remains in effect until the case is resolved (through settlement, trial, or appeal). Usually, if the case is discontinued or abandoned by the plaintiff (without insurer consent), the premium might become payable or there may be consequences since the insurer took on risk expecting a genuine attempt at success. It’s best to involve the insurer if considering a settlement that doesn’t fully succeed, to understand how the premium or coverage will be handled.

Bottom line: ATE insurance is designed to be as painless as possible for the insured during the life of the case – no large upfront costs, no ongoing premiums, and a claim payout process that coincides with an adverse outcome when you need it most. It’s a safety net that you arrange early but only “use” if things go badly. And if things go well, you pay for the net out of your success.

Canadian law firms can obtain ATE insurance through licensed brokers who understand this niche product. Working with a broker is important – they can find the right insurer and policy terms for your specific case type and needs. For instance, ALIGNED Insurance, as a Canadian brokerage, offers expertise in ATE insurance and can help law firms secure a policy that covers their exposure while fitting the case dynamics. Engaging a knowledgeable broker ensures that the policy you get has the appropriate coverage, limits, and conditions (and that the premium quoted is competitive for the market).

Case Types Covered vs. Excluded by ATE Insurance

ATE insurance is not one-size-fits-all; it is generally intended for civil litigation cases where cost awards are a risk. While specifics vary by insurer, here’s a look at common case types that can be covered and those typically excluded or not suitable for ATE coverage:

Common Covered Case Types	Common Excluded Case Types
Personal Injury and Tort Claims (e.g.	Criminal Defence Cases – ATE insurance is not used in criminal cases because typically there are no adverse cost awards against a defendant who is acquitted (and public policy generally forbids insurance against criminal penalties).
Commercial Litigation (breach	Family Law and Divorce – Disputes like divorce, child custody, or support are usually excluded. While Canadian family courts can award costs, insurers often avoid these due to their emotional nature and non-commercial aspects.
Class Actions and Mass Torts – Representative	Matters in Small Claims or Tribunals – Small Claims Courts (and many administrative tribunals) either don’t award legal costs at all or only minimal amounts, so there’s little need for ATE coverage (and insurers typically won’t cover such cases).
Estate Litigation (will challenges, estate disputes)	Certain Employment Disputes – While wrongful dismissal lawsuits can be covered, many employment disputes go through tribunals or arbitration without cost awards. Purely statutory claims without costs are not eligible.
Appeals of Civil Cases – If a case	Cases with Uninsurable Conduct – Any case involving fraud by the insured, or other dishonest/illegal conduct is uninsurable. (If a claim is based on something the client knew was false, coverage would be void.) Also, if the case itself is deemed frivolous or very low chance of success, insurers will decline coverage rather than exclude – they simply won’t issue a policy.

Note: The above lists are general. Each insurer has their own appetite. For example, some insurers focus on personal injury and won’t cover commercial cases, while others specialize in corporate litigation risk. Geography can matter too – ATE insurance is available across Canada, but usage is most common in provinces like Ontario, British Columbia, and Alberta where the volume of civil litigation and cost exposure is highest. In Quebec, where the legal system and cost rules differ, ATE products might be less common or structured differently (cost awards in Quebec are generally smaller, as they use tariffs). Always check with your broker or insurer about whether a particular case is eligible.

Key Policy Features: Premiums, Limits, and Flexibility

When considering ATE insurance for your firm or your client, pay attention to these policy features and terms:

Policy Limit (Coverage Amount): This is the maximum the insurer will pay. It should be sufficient to cover worst-case adverse costs plus expected disbursements. Law firms often err on the side of a higher limit to be safe, but note that the premium is tied to the limit – higher coverage will cost more. A good broker will help you strike the right balance. Some policies also express separate sub-limits (e.g., “up to $X for opponent’s costs and $Y for your disbursements”), while others have one aggregate limit for everything.
Premium Structure: As discussed, ATE premiums are usually deferred and contingent. Make sure you understand under what conditions the premium is payable (virtually always only on success) and if any portion is payable upfront. The amount of the premium can vary widely. For example, an insurer might quote a $30,000 premium for a $150,000 limit policy on a complex case, payable only if you win. Another case might see a $10,000 premium for a $50,000 limit. The premium generally reflects the insurer’s assessment of risk: how likely you are to win and how high the costs could be. If one insurer offers a steep premium, it’s worth shopping around through your broker – others might have a different view of the risk and offer a better price.
Stage of Attachment: Confirm what stage of the case the policy covers from. Does it cover costs from the very start of the case, or only from the date of policy onward? Many cover from inception of the case (especially if bought early). If bought late, ask if earlier costs (like an earlier motion you lost and had to pay costs for) can be included retroactively. Some retroactive coverage might be possible as long as those costs were part of the same case and the outcome was still undecided when you purchased the policy.
Duration and Continuation: Policies will usually stay in force through appeals (sometimes automatically, sometimes you need to notify the insurer if an appeal is launched). Ensure your policy explicitly notes coverage through the final resolution, including appeals if that’s a concern. If your client might appeal a loss, or the defendant might appeal a win, discuss with the insurer how that is handled. You might need an endorsement or separate coverage for appeal level.
Cancellation Terms: Typically, the insured (plaintiff) shouldn’t settle or discontinue the case without considering the ATE policy. If a case is settled without a cost order, usually no claim arises and the premium may still be owed (since it’s a win scenario). However, if you discontinue (drop the case) without the insurer’s consent, some policies treat that as a breach that makes the premium immediately due (since the insurer didn’t get the chance to see an outcome). Review any clauses about if the insured ends the case early or if there’s misconduct – those could affect coverage or premium.
Exclusions and Conditions: Aside from case-type exclusions we covered, ATE policies have standard insurance conditions. They will exclude things like fraudulent misrepresentation (e.g., if the client or firm lied in the application). They also often require prompt notice of any significant developments in the case (like settlement offers, upcoming hearings) so the insurer is kept in the loop. Breaching conditions could jeopardize coverage, though in practice insurers try to work with insureds as long as there’s no bad faith. ATE insurers want you to win – remember, they profit only if you succeed (premium paid and no claim). So their interests align with yours more than a typical insurer. This means they might actually inquire about case progress and even offer input if they have expertise (some insurers have lawyers on staff monitoring cases they insure).
Excess or Co-Insurance: In some instances, an ATE policy might not cover 100% of the costs. For example, an insurer might only offer to cover 90% of adverse costs, requiring the insured to hold some “skin in the game.” Or they might have a deductible (the insured covers the first $X of costs). This is not very common in ATE (most aim to cover fully), but it’s worth checking. If there is any self-insured portion, factor that into your risk planning.
Multiple Defendants or Multiple Cases: If your litigation has multiple defendants (and hence potential multiple cost orders if you lose against some and win against others), ensure the ATE policy accounts for that – you might need a higher limit or clarity on how it applies. If you have a portfolio of cases, some advanced brokers/insurers can structure portfolio ATE insurance (covering a batch of cases with a shared aggregate limit or premium deal). This is more common in large volume personal injury firms or class action firms to get cost efficiencies.

In summary, carefully review the terms of any ATE quote or policy. Work with your broker to negotiate and clarify these terms so you and your client know exactly how and when the coverage will respond. A well-structured ATE policy will be tailored to your case’s needs and will sit in the background as a silent protector as the case moves forward.

Why ATE Insurance Is More Important Than Ever in Canada

Canadian civil litigation is evolving, and ATE insurance is rising in prominence as a result. Here are a few context points to consider:

Rising Litigation Costs: The costs of pursuing or defending a lawsuit have been steadily increasing – from higher expert fees to protracted pre-trial procedures. Likewise, adverse cost awards in Canada can be substantial. For example, a five-day civil trial in Ontario can result in tens of thousands of dollars in legal costs that the losing party must pay. This financial exposure is a growing concern for law firms and clients alike, especially post-pandemic where budgets are tight. ATE insurance directly addresses this concern by capping those costs.
Access to Justice Concerns: Canadian courts and law societies have been actively discussing how to improve access to justice. One barrier to justice is the fear of cost awards. As awareness of ATE insurance grows, it is increasingly seen as a private-sector tool that complements access to justice efforts – allowing more plaintiffs to bring forward legitimate claims without the chilling effect of potential bankruptcy from losing. In provinces like Ontario, legal communities are educating members about ATE insurance as part of litigation risk management best practices.
Changes in Civil Procedure: There have been recent and proposed changes to civil litigation processes aimed at efficiency. For example, Ontario has considered measures such as streamlined trials, limits on discovery, and encouraged early dispute resolution. While these aim to reduce delays and expense, they also mean cases could move faster to resolution with less time to “wear down” an opponent or accumulate war chests. This environment makes having financial protections in place early even more critical. Additionally, rules like Ontario’s simplified procedure (for mid-size claims) cap recoverable legal costs, which is good for predictability but in higher claims, there is still a significant cost risk. If reforms lead to more stringent cost consequences for certain actions (or if “loser pays” becomes even more strictly enforced), law firms will find ATE insurance a prudent safeguard. Essentially, as litigation becomes a more finely tuned process, the focus on managing risk intensifies.
Increase in Complex Cases: Many law firms report that while the number of trials is not drastically increasing (most cases still settle), the complexity and stakes of cases have grown. Class actions, large commercial disputes, and group litigation funding are more common now than a decade ago. With bigger stakes comes bigger risk. ATE insurance has correspondingly become more mainstream in Canada as firms realize it’s almost reckless to litigate a high-stakes case without some protection. The question often is not “Can we afford the premium?” but rather “Can we afford not to have this insurance if something goes wrong?”
Expectation from Sophisticated Clients: In the UK and Europe, ATE insurance is a standard discussion for any significant litigation. Canadian clients – especially sophisticated ones like corporations or institutional investors – are becoming aware of these products from their global counterparts. Managing partners have noted that someclients now ask about insurance options for litigation risk. Being ready to answer and offer a solution like ATE insurance demonstrates your firm is keeping up with modern risk management trends. It also deepens client trust; you’re not just their litigator, but also a risk advisor looking out for their financial well-being.

In combination, these factors mean that ATE insurance is increasingly a part of the Canadian litigation landscape. It’s moving from a little-known niche product to a common tool in the toolbox for litigation counsel. Forward-thinking law firm leaders are proactive about it: establishing internal guidelines for when to recommend ATE to clients, building relationships with brokers/insurers, and even factoring ATE into their case strategy (e.g., budgeting the likely premium into settlement calculations). Those who incorporate ATE insurance effectively can turn unpredictability in litigation into a manageable variable, which is a significant strategic advantage.

Conclusion: Leverage ATE Insurance for Protection and Growth

As a managing partner or law firm owner, you navigate a multitude of risks with every case you take on. After-the-Event insurance stands out as a powerful ally in this regard – it tackles one of the most daunting uncertainties in litigation (adverse cost risk) and transforms it into a fixed, manageable cost. By clearly defining what ATE insurance is and how it works in Canada, we’ve seen that it’s much more than a safety net; it’s a strategic tool that can help drive firm success.

With ATE insurance, you and your clients gain peace of mind that losing a case won’t mean financial ruin. This peace of mind enables better decision-making: you can litigate based on the merits of the case, not merely on fears of cost exposure. The educational yet persuasive takeaway is clear – ATE insurance can strengthen your firm’s credibility and negotiating position, reassure clients, and protect your hard-earned resources. It embodies the kind of prudent risk management that stakeholders (from clients to insurers to business partners) expect from leading law firms.

And perhaps most importantly, ATE insurance allows you to focus on what you do best: advocating for your client’s interests, without constantly looking over your shoulder at the “what ifs” of an adverse outcome. In a profession where trust and results are paramount, having a licensed insurer vouch for your confidence in a case speaks volumes.

Ready to explore ATE insurance for your firm’s cases? Working with a licensed Canadian brokerage experienced in ATE insurance is the next step. ALIGNED Insurance is one example of a brokerage that helps law firms across Canada obtain ATE coverage tailored to their needs. To find out how ATE insurance can protect your firm and clients, https://www.alignedinsurance.com/get-a-quote/ today. By taking action, you’ll be aligning your firm with a forward-looking solution that delivers credibility, protection, and peace of mind for both you and your clients.

Frequently Asked Questions (FAQs) about ATE Insurance

Q: Is ATE insurance legal and allowed in all Canadian provinces?
A: Yes. ATE insurance is a legitimate and legal form of insurance in Canada, available across the country. It is most commonly used in provinces with a robust civil litigation environment (like Ontario, BC, Alberta), but it can theoretically be utilized anywhere the “loser pays” principle applies in civil cases. You should work with a licensed Canadian insurance broker to find an insurer that offers ATE policies in your province and for your type of case. Note that Quebec’s legal system has some differences (e.g., lower cost awards), so the demand and availability there might differ, but the concept of ATE insurance remains valid.

Q: How much does ATE insurance cost (premium-wise)?
A: The cost of an ATE insurance premium varies depending on the specifics of your case – like the type of case, the amount of coverage you need, and the assessed risk of your case. Insurers often express the premium as a percentage of the coverage amount or the potential damages. For instance, a premium might range from, say, 20% to 40% of the insured limit as a rough ballpark, but remember, you typically only pay this premium if you win the case. If you lose, the insurer covers the costs and you usually owe nothing for the premium. Every case is unique, so the best way to get an exact price is to request a quote for your specific situation. The quote will outline what the premium would be (and on what terms) given the details of your case.

Q: What types of law firms or clients benefit most from ATE insurance?
A: Any law firm that handles litigation on behalf of plaintiffs (or counterclaimants) can benefit from ATE insurance. It’s particularly popular with personal injury firms, class action firms, and litigation boutiques – especially those working on contingency fees – because their business model involves taking on cases with the promise of no fee if they lose. ATE insurance complements contingency arrangements by also removing the risk of owing the opponent’s fees. However, corporate/commercial litigation firms representing businesses can also use ATE for large disputes to manage corporate financial risk. Both small and large firms benefit: a small or mid-size firm might use ATE to ensure one big case doesn’t bankrupt the firm, whereas a large firm might use ATE to give an extra layer of protection or to satisfy corporate clients’ risk management policies. In essence, if your firm or client would struggle to pay an adverse cost award (or simply wants to eliminate that risk as a factor), ATE insurance is beneficial.

Q: How is ATE insurance different from litigation funding?
A: Litigation funding typically refers to obtaining capital from a third-party funder to finance a legal action (covering legal fees and expenses in exchange for a portion of any recovery). ATE insurance, on the other hand, doesn’t fund your case upfront but rather insures against the downside risk. They can complement each other – for instance, a litigation funder may even require that you have ATE insurance to protect against cost awards. The key difference is that ATE is an insurance contract with an insurer (and regulated as insurance), whereas litigation funding is more of an investment/loan arrangement with a finance company. Also, ATE’s cost (the premium) is only paid if you win, whereas a litigation funder typically takes a chunk of the winnings as their return. Both tools help manage financial aspects of litigation but in different ways.

Q: Can defendants purchase ATE insurance?
A: ATE insurance is predominantly used by plaintiffs (or parties bringing a claim) because they are the ones exposed to paying the other side’s costs if they lose. Usually, defendants in Canada’s cost system are not required to pay the plaintiff’s costs if the defendant wins – instead, the plaintiff pays the defendant’s costs. So a defendant doesn’t face the same risk of a cost award (they are the beneficiary of a cost award when they win). However, a defendant might worry about having to pay their own disbursements or, in rare cases, certain penalties – but these are generally not insurable via ATE. In short, ATE insurance is almost always about protecting the party who initiates the claim (plaintiff or claimant). There are other insurance products for defendants (like cost indemnity policies or defendant cost insurance) but they are less common. If you’re a defendant concerned about covering your legal fees, you’d more likely look at legal expense insurance (BTE insurance) that you ideally already had in place, or explore whether the plaintiff can be required to post security for costs.

References:

Wikipedia. Legal Expense Insurance – After-the-Event (ATE) Insurance. (Definition of ATE insurance).
ARAG Canada. After-the-Event Insurance Coverage Details. (Costs and disbursements covered by ATE).
Example Law Firm Blog. Before the Event vs After the Event Insurance. (Difference between BTE and ATE).
LexisNexis. Understanding ATE Insurance Premiums. (Deferred and contingent premium explanation).
Canadian Lawyer Magazine. ATE Insurance Arrives in Canada. (Growing availability in Canadian provinces).
DAS UK (for Canada). ATE Insurance Policy Terms. (Retroactive coverage option).
Ontario Bar Association. Security for Costs and ATE Policies. (ATE policy considered as security for costs).
Canadian Lawyer. Average Cost of Litigation Survey. (Five-day trial cost statistic).

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