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No Win No Fee – No Insurance? How Taking Out Insurance Can Protect You in a Personal Injury Case

Continuing our series on ‘no win no fee’, this article discusses the insurance options available to claimants that provide protection against paying legal costs and expenses.

As mentioned in the previous blog , the no win no fee model was introduced in the mid-1990s in order to give people access to justice without the risk of having to pay crippling legal fees.

There are two types of insurance available that can assist litigants with legal expenses.  They are:

  • Before the event insurance (BTE)
  • After the even insurance (ATE)

Let’s look at each option in detail.

Before the Event Insurance (BTE)

Before the event insurance (BTE) is often purchased alongside other types of insurance such as car or household insurance and it provides protection in a similar way.  For example, when you insure your car, you are insuring against a hypothetical event happening, such as your car being stolen or being involved in an accident.  BTE insurance works in the same way, you purchase it in order to protect yourself in advance in case one day you are involved in litigation and have to pay legal costs.

Insurers offering BTE insurance will only pay if they believe that you have an above average chance of succeeding in your litigation claim and you cannot purchase this type of insurance if you are already involved in a court case.  It will cover your lawyers and court fees and expenses but it will not cover you for any compensation that you are ordered to pay if you are unsuccessful in defending your case.

People who have BTE insurance may prefer to take advantage of their policy rather than engage in a no win no fee arrangement.

After the Event Insurance (ATE)

After the event insurance (ATE) is usually taken out by the claimant’s solicitor, although it is also available to defendants.  ATE insurance is purchased at the beginning of a claim and normally covers the legal costs and expenses that the court orders the claimant to pay to the defendant if they are unsuccessful in their claim.  As with BTE insurance, you or your solicitor will need to convince the insurance provider that your claim has a good chance of being successful.

It is highly advisable to purchase ATE insurance when entering into a no win no fee arrangement, especially if, as a claimant, your contract with your solicitor requires you pay some or all of the court costs if you are unsuccessful in your case.

If you have taken out ATE insurance before the 1st April 2013, the unsuccessful defendant is liable to pay the insurance premium.  However, if the insurance was taken out after the 1st April 2013, the individual who has taken out the policy is required to pay the premium.

In Summary

Taking out litigation insurance offers further protection against being hit with legal costs if you fail in your claim to receive the compensation you deserve.  It allows more vulnerable members of society to have access to the law and the opportunity to fight for justice.

If you have any questions related to purchasing litigation insurance then please call our office on freephone 0800 221 8888 to talk to one of our friendly advisors who will explain the details in depth.