ATE Insurance (After the Event)

After the Event insurance is a policy purchased after a legal dispute has arisen that covers the insured's adverse costs exposure — specifically, the risk of being ordered to pay the opposing party's legal costs if the claim fails. ATE is particularly important in English-law jurisdictions operating under the loser pays rule, where an unsuccessful claimant can face a substantial adverse costs order. In litigation finance transactions, ATE is frequently used alongside funding to provide a complete capital solution: the funder covers the claimant's own legal costs, and the ATE policy covers any adverse costs award. ATE premium is typically deferred and contingent on success, adding to the funded party's liability waterfall but requiring no upfront payment.

Because ATE premium is typically deferred and contingent on success, funders in loser-pays jurisdictions treat it as an addition to the funded party's liability waterfall rather than an upfront cost, and they structure the overall capital solution — funding plus ATE — as a single package precisely because the two are usually needed together to fully de-risk a claim. Funders assess ATE insurer creditworthiness as part of diligence, since a policy that will not actually pay out on an adverse costs order provides no real protection regardless of its stated coverage limit.