BTE Insurance (Before the Event)

Before the Event insurance is legal expenses coverage purchased before any dispute arises, typically as part of a personal or commercial insurance policy — for example, as an add-on to a household or business liability policy. BTE is common in the UK and Germany, where it provides coverage for legal costs of pursuing or defending claims up to a policy limit. From a litigation finance perspective, BTE coverage affects funding decisions because a claimant with BTE may not need third-party funding for legal costs but may still seek funding to manage adverse costs risk or to access a larger capital commitment than the BTE limit provides. Funders must assess whether BTE coverage is in place and how it ranks in the recovery waterfall before structuring a deal.

Funders check for existing BTE coverage before structuring a deal because a claimant with BTE may only need funding to cover costs above the policy limit or to manage adverse costs risk, changing the size and structure of the capital the funder actually needs to provide. Where BTE coverage exists, funders negotiate its priority in the recovery waterfall explicitly, since an unaddressed overlap between BTE proceeds and funding repayment is a common source of post-settlement dispute.