Legal Expenses Insurance Flashcards
(10 cards)
What does Before-the-Event (BTE) insurance cover?
A. Legal costs for specified disputes purchased before any claim arises
B. Opponent’s costs if the client loses a case
C. Purely criminal defense work
D. Success fees under CFAs
A. Legal costs for specified disputes purchased before any claim arises
Explanation: BTE is bought in advance (often as part of home or motor cover) and funds legal fees/disbursements for agreed areas
An After-the-Event (ATE) policy is typically used to insure against:
A. The client’s liability for the opponent’s costs if their claim fails
B. The solicitor’s own professional indemnity exposure
C. Disbursements under a BTE policy
D. The insurer’s underwriting losses
B. The client’s liability for the opponent’s costs if their claim fails
Explanation: ATE specifically covers adverse costs orders; it does not cover the solicitor’s own fees
Which feature is common to most BTE policies?
A. A deductible (excess) and overall limit of cover
B. Mandatory court approval of every cost
C. Guarantee of win for the client
D. Coverage of success fees
A. A deductible (excess) and overall limit of cover
Explanation: BTE policies include an excess and a maximum sum insured for legal costs
Under a typical BTE arrangement, who decides which solicitor handles a claim?
A. The insurer, from its approved panel
B. The client, with no insurer input
C. The SRA, via an annual rota
D. The court, upon filing
D. The insurer, from its approved panel
Explanation: Insurers usually require policyholders to use solicitors from their panel of approved lawyers
A policyholder with BTE cover wants to instruct an unapproved firm. The insurer will most likely:
A. Decline to reimburse costs incurred by that firm
B. Automatically waive the excess
C. Require no notification before instruction
D. Pay success fees under a CFA arrangement
A. Decline to reimburse costs incurred by that firm
Explanation: BTE policies typically reimburse only panel solicitor costs, not outside firms
A client on BTE cover notifies the insurer only after instructing their own lawyer. The insurer may:
A. Refuse cover due to late notification
B. Pay double the normal limit
C. Insist on ATE cover instead
D. Automatically extend cover to any matter
B. Refuse cover due to late notification
Explanation: Early notification is usually a condition precedent; failure may void the cover
ATE insurance is most appropriately taken out:
A. After the dispute has arisen and a CFA is in place
B. Before any potential dispute ever occurs
C. As part of general home insurance
D. Only for criminal cases
D. After the dispute has arisen and a CFA is in place
Explanation: ATE is designed to protect against adverse costs in litigation after proceedings start, often alongside a CFA
Which of the following is NOT typically an exclusion in BTE policies?
A. Pre-existing disputes
B. High-value commercial arbitrations
C. Jurisdictions subject to sanctions
D. Employment tribunal claims
A. Pre-existing disputes
Explanation: Pre-existing disputes are excluded; everything else may be covered depending on policy wording
A client with BTE and ATE cover engages in a personal injury claim under a CFA. Which costs does ATE cover?
A. Opponent’s costs if the client loses
B. The solicitor’s hourly fees
C. The BTE policy excess
D. The insured’s deductibles
D. Opponent’s costs if the client loses
Explanation: ATE insures specifically against the risk of paying the opponent’s costs; it does not cover the BTE excess
A BTE policy limit is £100,000 with a £1,000 excess. Legal costs of £20,000 are incurred. The insurer pays:
A. £19,000
B. £20,000
C. £1,000
D. £0
D. £0
Explanation: If notification conditions aren’t met—or if the panel requirement is breached—the insurer can refuse any payment; otherwise they’d pay £19,000 (£20,000–£1,000)
