How does before-the-event insurance differ from ATE insurance?

By when it is bought and what it is for. BTE is bought in advance, usually cheaply as part of another policy, and pays the insured's own legal costs (and often adverse costs) on future disputes that fall within its scope. ATE is bought after a dispute has arisen, priced to that specific case, and mainly covers the other side's costs if the claim loses. FOS says ATE is used 'when there isn't any before the event cover or if it's run out.'

Does BTE cover every case?

No. Policies cover listed types of dispute, set an indemnity limit, and require a 'reasonable prospect of success,' which FOS interprets 'to mean a 51% or more chance of winning,' assessed by a suitably qualified lawyer. Claims outside scope, over the limit or below that threshold are not covered, and the insured then needs other funding or ATE.

Can the insured choose its own lawyer?

Under BTE, the insurer usually appoints a panel firm at first. FOS explains that panel solicitors are normally used until it is decided legal proceedings are needed, at which point 'a policyholder would have the right to choose their own solicitor.' In the EU, Council Directive 87/344/EEC requires legal expenses contracts to recognize that the insured 'shall be free to choose' a lawyer in proceedings and when a conflict of interests arises, with a limited exemption for some motor policies.

Which matters for funded commercial litigation?

Mostly ATE. Commercial claimants rarely have BTE that covers a large business dispute, so funded commercial cases in loser-pays systems usually rely on ATE for adverse costs. BTE matters where a claimant already has it: a funder will want to know because BTE may pay some costs, its insurer may control counsel at first, and its limit may run out mid-case.

How do the costs compare?

BTE premiums are small and paid up front for a year of cover across many possible disputes; ATE premiums are priced per case and often deferred and contingent, payable from a winning recovery. Burford's note says ATE premiums commonly have 'a small upfront premium ... with the majority contingent on the claim's success.' In England and Wales neither premium is generally recoverable from the loser, under section 58C of the Courts and Legal Services Act 1990.

Is BTE common in the US?

Less so in this form. Legal expenses cover sold with home and motor policies is a European and UK market feature; US equivalents are mainly prepaid legal plans and the defense coverage within liability policies, which works differently. Because the US generally does not shift attorneys' fees to the loser, ATE is mainly bought for cases in loser-pays forums and for international arbitration.

Before-the-Event vs ATE Insurance

Litigation Finance & Legal Claims

Definition

Before-the-event (BTE) insurance is legal expenses insurance bought before any dispute arises, covering the insured's own legal costs, and sometimes adverse costs, for future disputes within its terms. After-the-event (ATE) insurance is bought once a dispute exists, mainly to cover adverse costs. The Financial Ombudsman Service says most BTE policies 'are added to home or car insurance as an optional extra' and protect policyholders 'in case legal action has to be fought or defended in the future,' while ATE policies are usually standalone and taken out when action is already decided.

Why it matters

BTE and ATE both pay legal costs, but they answer different questions: BTE is a small, advance purchase for disputes that might happen, while ATE prices a specific dispute once its risk is known. For funded litigation the distinction matters because existing BTE can pay part of a case and bring an insurer's control over counsel and prospects, while ATE is usually what caps adverse costs in a commercial claim. A funder that does not know about BTE cover can find another party with rights over the case. For an investor, ask whether funded claimants' existing insurance was checked, and whether the fund relies on ATE limits that match likely costs.

Common misconceptions

•BTE and ATE are not the same policy bought at different times, because BTE mainly funds the insured's own costs while ATE mainly covers the other side's.
•BTE does not cover any dispute, because it is limited to listed types of claim, an indemnity limit and a prospects test.
•An insurer's panel firm is not always mandatory, because in the EU and UK the insured can generally choose its own lawyer once proceedings are needed.
•ATE premiums are not paid by the loser in England and Wales, because section 58C generally bars recovering them in a costs order.
•BTE is not irrelevant to a funder, because existing cover can pay part of a case and bring insurer rights over counsel and prospects.

Technical details

Worked example (illustrative): a small business claim that uses both

A business's BTE policy covers contract disputes up to GBP 100,000 of own costs, subject to a 51% prospects test.

The claim is assessed at 60% prospects; the BTE insurer funds panel solicitors through pre-action steps and the first GBP 100,000.

Costs to trial are estimated at GBP 300,000 own costs and GBP 250,000 for the defendant.

The business arranges funding for the extra GBP 200,000 of own costs and buys ATE with a GBP 250,000 limit for adverse costs.

If the claim loses: BTE has paid its GBP 100,000, the funder loses GBP 200,000, ATE pays the defendant's costs.

Side by side

Timing: BTE before any dispute; ATE after the dispute arises.

Main cover: BTE own legal costs (often adverse costs too); ATE adverse costs (often own disbursements).

Price: BTE small annual premium; ATE case-specific, often deferred and contingent.

Gatekeeping: BTE scope, limit and a 51% prospects test (FOS); ATE underwriting of the specific case.

Counsel: BTE panel firm at first, with free choice in proceedings (EU Directive 87/344/EEC, FOS); ATE usually the insured's existing counsel.

What AltStreet's reviews and filings show

Financial Ombudsman Service guidance (read 2026-11-09): most BTE added to home or car insurance; ATE usually standalone; 'reasonable prospect of success' read as 51% or more; panel solicitors until proceedings are needed.

Council Directive 87/344/EEC, Article 4: free choice of lawyer in proceedings and on conflicts of interest; Article 5: exemption for certain road vehicle assistance policies.

Burford's 'Adverse Costs and Insurance' note says that 'in Europe, the UK and much of the common law world, the principle is that the loser in litigation will pay the winner's costs,' that GBP 5 million for a defendant's costs to trial 'is not seen as ridiculous,' and that exposure in a cartel or antitrust matter with several defendants 'could easily hit GBP 20 million'.

LASPO 2012 section 46 (section 58C, Courts and Legal Services Act 1990): premiums generally not recoverable in a costs order.

Questions for a funded claimant or fund

Does the claimant have BTE, and does it cover this dispute?

What is its limit, and who chooses counsel under it?

Has the BTE insurer accepted or declined the claim, and on what prospects assessment?

How do the BTE insurer's rights interact with the funding agreement?

Is ATE in place for adverse costs above any BTE cover?

How investors apply the term

Investors usually apply this term by tying the definition back to the controlling documents and then asking which cash flows, rights, restrictions, or valuation assumptions it changes. A useful review looks at the term alongside fees, leverage, liquidity, reporting frequency, and manager discretion rather than treating it as a standalone concept.

The practical diligence test is simple: identify who benefits if the assumption is wrong, who has control when conditions change, and what evidence the investor receives after closing. Terms that cannot be reconciled to documents, cash movements, and monitoring data should be treated as marketing shorthand until proven otherwise.

Frequently asked questions

How does before-the-event insurance differ from ATE insurance?: By when it is bought and what it is for. BTE is bought in advance, usually cheaply as part of another policy, and pays the insured's own legal costs (and often adverse costs) on future disputes that fall within its scope. ATE is bought after a dispute has arisen, priced to that specific case, and mainly covers the other side's costs if the claim loses. FOS says ATE is used 'when there isn't any before the event cover or if it's run out.'
Does BTE cover every case?: No. Policies cover listed types of dispute, set an indemnity limit, and require a 'reasonable prospect of success,' which FOS interprets 'to mean a 51% or more chance of winning,' assessed by a suitably qualified lawyer. Claims outside scope, over the limit or below that threshold are not covered, and the insured then needs other funding or ATE.
Can the insured choose its own lawyer?: Under BTE, the insurer usually appoints a panel firm at first. FOS explains that panel solicitors are normally used until it is decided legal proceedings are needed, at which point 'a policyholder would have the right to choose their own solicitor.' In the EU, Council Directive 87/344/EEC requires legal expenses contracts to recognize that the insured 'shall be free to choose' a lawyer in proceedings and when a conflict of interests arises, with a limited exemption for some motor policies.
Which matters for funded commercial litigation?: Mostly ATE. Commercial claimants rarely have BTE that covers a large business dispute, so funded commercial cases in loser-pays systems usually rely on ATE for adverse costs. BTE matters where a claimant already has it: a funder will want to know because BTE may pay some costs, its insurer may control counsel at first, and its limit may run out mid-case.
How do the costs compare?: BTE premiums are small and paid up front for a year of cover across many possible disputes; ATE premiums are priced per case and often deferred and contingent, payable from a winning recovery. Burford's note says ATE premiums commonly have 'a small upfront premium ... with the majority contingent on the claim's success.' In England and Wales neither premium is generally recoverable from the loser, under section 58C of the Courts and Legal Services Act 1990.
Is BTE common in the US?: Less so in this form. Legal expenses cover sold with home and motor policies is a European and UK market feature; US equivalents are mainly prepaid legal plans and the defense coverage within liability policies, which works differently. Because the US generally does not shift attorneys' fees to the loser, ATE is mainly bought for cases in loser-pays forums and for international arbitration.