The following Dispute Resolution guidance note provides comprehensive and up to date legal information covering:
This Practice Note looks at costs insurance (sometimes known as legal expense insurance (LEI)), which is the means by which an insured person is protected against the risks of an adverse costs award in litigation. The two main types being before the event insurance (BTE insurance) and after the event insurance (ATE insurance). This Practice Note should be read in association with Practice Note: Recovery of costs insurance premiums.
Insurance is a complex area and one subject to regulatory requirements. It is however important to understand these requirements as a failure to comply would allow the court to find that the policy is unenforceable and this in turn will limit costs recovery. See further: Insurance principles and concepts—overview and Regulated activities—overview.
LEI policies are regulated by the Insurance Companies (Legal Expenses Insurance) Regulations 1990, SI 1990/1159. LEI insurance will require the payment of a premium for the insurance cover and the cover will be subject to an excess, ie the first £X will not be covered by the insurance and will be payable by the client. The costs of the premium will depend on the amount of cover sought and can range from thousands to millions of pounds. The level of the premium can be set out either as a percentage of the sum insured or as a percentage of the costs incurred
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