Generally speaking, if you take your personal injury or long term disability (LTD) case to trial and lose, then you will have to pay at least a part of the winning side’s costs associated with defending the claim. Costs awarded to the winning party can be upwards of hundreds of thousands of dollars. The reality is that most people cannot afford to pay this. Big insurance companies don’t mind losing trials because they have deep pockets
How adverse cost insurance can affect your personal injury trial
Adverse costs insurance, also known as ‘Trial Insurance’ or ‘After the Event (ATE) Insurance’, can help level the playing field between personal injury plaintiffs and defendant insurance companies.
Most victims of car accidents or other personal injury claims often hire lawyers on “contingency”. This means the lawyer does not get paid until the client does. What’s really happening is the lawyer is fronting all the costs associated with litigating the case in hopes of getting paid at the end.
What are the risks?
There is always a risk that a plaintiff can lose the case. If an insurance company loses a case it is just a drop in the bucket. If a plaintiff suing an insurance company loses a case then the aftermath can be devastating. Adverse costs insurance protects personal injury or long term disability plaintiffs in this circumstance by providing coverage to cover these costs.
When’s the best time to purchase coverage?
Insurance coverage can range between $25,000.00 – $100,000.00. If you buy the insurance earlier in the personal injury or long term disability litigation process then the premium is cheaper (1-2% of the coverage). Usually the premium is paid upon settlement of the lawsuit. This makes it easier for plaintiff to buy the insurance because there is no money up front.
