After the Event Insurance is needed to protect you in case you lose your no win-no fee claim
After the Event (ATE) insurance is where you take out an insurance policy after a legal problem or dispute has arisen in order to protect you against the risk of having to pay the other side’s legal costs if you lose.
Why is this type of insurance important for “no win-no fee” personal injury claims?
The difference between winning and losing your claim
We have seen how your solicitor will get paid for their work for you on a no win–no fee arrangement if they are successful in getting personal injury compensation for you.
It’s one thing to look at a winning scenario but it’s also important to be alive to the possibility that your claim might not succeed. What then?
No win–no fee means you won’t have to pay anything to your solicitor for their work, if you lose.
However, you could be at risk of having to pay other costs if things don’t work out in your favour.
Under no win–no fee, failure of your case is not a problem (in terms of having other bills to pay) if your claim has not got to the point where a court action has been raised.
Where your claim has to go to court in Scotland it will either be in the Sheriff Court or the Court of Session.
In the Sheriff Court, most litigated cases cost several thousand pounds; in the Court of Session, it can easily be tens of thousands of pounds.
If your case is lost after a court action has been raised, there may well be an award of expenses (costs) against you. This is because the general rule is that expenses “follow success”.
The need to have an insurance policy in place to cover court costs if your case is lost
There are possible risks to you if your claim is not covered by some kind of insurance.
The insurance type most familiar to all of us is probably what is known as Before the Event (BTE) Insurance.
We take out car insurance in order that we are covered for the cost of repairs or replacement “before the event” where by some means damage is caused to our vehicle. Of course, car insurance is compulsory.
But BTE insurance also covers situations where we have a choice whether or not to insure, such as with house contents insurance – where you take out insurance before the “event” where a pipe bursts, floods your house and ruins your furniture and belongings – which you then need to replace.
After the Event insurance for personal injury claims
ATE insurance is well-suited to personal injury claims.
Many established insurers offer insurance products of this type, though it tends to be only specialist PI solicitor firms, with a proven track record of successful claims, which have access to these policies.
The premium will be payable if the case is won but the general rule is that the payment of the premium is deferred until the end of the case.
Also, in many cases, you only have to pay the premium if you win.
In other words, the insurer indemnifies you not only against the risk of having to pay the other side’s court costs but the insurance premium is insured as well.
This can seem counter-intuitive – a bit like getting something for nothing – but it is simply one way the insurer can share in the overall risk.
Without ATE Insurance, your home could be on the line
We hope you can see from this why ATE insurance is crucial.
Without it, the access to justice provided by a no win–no fee arrangement leaves you dangerously exposed financially.
In the worst case, an award of expenses against you could lead to you being made bankrupt, putting assets like your house at risk.
Any no win–no fee agreement you sign with your solicitor should make it clear that you are indemnified and insured against the risk that your claim might fail after a court action is raised and you are found liable for the opponent’s costs.
In some cases, a solicitor may seek to “guarantee” you against costs but without taking out ATE insurance cover. This is not ideal because law firms do go bust and any promise of that nature may prove to be unenforceable.
An important criterion in choosing your personal injury claim solicitor
Personal recommendation from a friend or relative, geographical proximity and even how quickly you can get a face-to-face appointment are also significant.
However, as we have seen above, in a no win–no fee personal injury case, the ability of your solicitor to give you a watertight guarantee of protection against costs (in the event that your claim has to go to court and you lose) is crucial.
Unfortunately, it is a bit of a hidden risk and not a factor the majority of injured people will know to take into account when deciding which solicitor to instruct for their claim.
Contact us for help
We are accredited specialist personal injury solicitors in Elgin, Moray.
Feel free to get in touch with us if you have any questions arising from this post or regarding personal injury claims in general.
All enquiries are free of charge and without obligation.
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