Glossary of Legal terms

Glossary of legal terms which you may come across whilst visiting The Judge.

After the event insurance ( also known as ATE Insurance, Conditional Fees Insurance, CFA insurance, Post Event Insurance,AEI or LEI) An insurance policy purchased after a dispute has occurred.

There are various types of ATE policies offering a range of cover options:

Own cost cover This means insurance cover for the solicitor’s own base fees. In truth own costs cover is only likely to be available in exceptional cases, as insurers prefer either the client or the solicitor to bear an element of the risk in the litigation.

Own disbursement cover Insurance cover for the client's own disbursements, for example, Counsel’s fees, expert reports, Court fees etc.

Adverse cost cover Insurance cover to indemnify the Insured in respect of the opponents' costs in the event the litigation is unsuccessful.

Before-the-Event Insurance ( BTE insurance ) A legal expenses policy purchased before a legal dispute has arisen. Most BTE policies cover litigation involving private indiviudals (such as personal injury or disputes involving the home) and are sold via car insurance or household insurance. However, policies are also available to cover businesses.

Premium The consideration the Insured agrees to pay to obtain the indemnity required.

There are a variety of different types of premium and payment terms. The following represents the most common premium definitions:

Deferred premium This means that the premium does not need to be paid to the insurer at the outset but rather the premium is payable upon the conclusion of the litigation and then only if the litigation has been successful. Deferred premiums are always either Self Insured or Conditional Upon Success (see below)

Self insured premium This means that the insurance company has agreed to insure the cost of the premium as part of the policy. Therefore, in the event of an unsuccessful outcome the insurance company will either reimburse the policyholder for the cost of the premium (if it was paid at the outset) or will not seek payment for the premium if the case is unsuccessful (if the premium was deferred).

Conditional upon success This is similar to the concept of self-insured, although in this instance the insurance company is advising that the policyholder’s liability to pay a premium only arises in the event of a successful outcome. If the case is unsuccessful, no premium is payable. The main practical difference from Self Insured is that in this scenario, the Limit of Indemnity is not used to pay the insured premium, and is only used to pay the remainder of any insured costs.

Limit of indemnity (LOI) The maximum the insurer will pay in the event of a claim under the policy.
Top-up insurance This is where a policy is required to 'top up' an existing policy of insurance, for example, a policyholder may have a Before-the-Event (BTE insurance) policy and the indemnity level may have been reached but the case has yet to conclude. In such circumstances the policyholder can apply for an ATE Insurance top up policy.
Insurance Premium Tax (IPT) The amount of tax that is to be applied to the premium, currently 5% of the Gross premium payable.