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ATE Insurance Premium Options
One of the most unique features of ATE insurance is the range of premium payment structures potentially available.
ATE insurers recognise that for many clients, paying an upfront premium in addition to the other legal fees and expenses, might not be possible.
Indeed, for some clients, the litigation itself is their main asset, meaning any significant payments are unlikely to be made unless and until a success can be achieved in the litigation. To combat this issue, insurers have over the years developed a range of different premium options:
Option 1: Fully ‘Deferred’ and ‘Contingent’ Premium
A deferred and contingent premium means that the insurer is paid their premium at the conclusion of the litigation and only in the event that it is successful. Accordingly, if the case is lost, the insurer pays a claim up to the limit of indemnity and doesn’t receive any premium whatsoever.
As you would expect, this type of ‘no win, no fee’ premium is more expensive than others but, for a client who has little or no available funds, a contingent ATE premium might be the only means through which they can afford to pursue their case.
Option 2: Partially ‘Contingent’ and Partially ‘Upfront’ Premium
In negotiating the cost of the premium, insurers will sometimes offer a lower overall price if the client is able to pay for some of the premium at the point of accepting the terms. For example, it may reduce the overall price of the premium if the client agrees to pay say 20% of the total cost upfront with the balance being deferred and contingent.
In this scenario, the insurer wouldn’t collect the 80% balance of their premium unless and until a success was achieved.
Option 3: Fully ‘Upfront’ Premium
Where a client has the ability and appetite to pay the entirety of the ATE insurance premium upfront, they are often in the strongest bargaining position to secure the lowest overall rate. Insurers can often charge a significantly smaller premium where it is paid upfront versus a fully contingent premium, where the insurer only collects its remuneration if the case succeeds.
Additional ATE Insurance Premium Features
In addition to the premium payment options detailed above, it’s fairly common for ATE insurers to offer some form of discount to the premium should the case settle before trial, particularly where a contingent premium applies.
These discount stages will be negotiated by your broker and can potentially be even more important than the headline premium rate, particularly where there is a realistic expectation that the case will settle early.
One of our specialist brokers will be able to explain all the options available for your case and negotiate on your behalf to secure the best offers from the market of ATE insurers.