After the event insurance in Ontario is coverage that may address some litigation-cost risks after a claim has begun, subject to its policy terms. It is relevant to adverse-cost questions, but it is not a guarantee against every expense. This guide explains what to ask and review.
Key takeaways: Ask what costs are covered, when the policy responds, what exclusions apply and how the premium or policy terms affect the litigation decision.
Costs in Ontario litigation
Ontario courts generally follow a “loser pays” approach to costs. A party who loses at trial, or on a motion, may be ordered to pay a portion of the other side’s legal fees and disbursements. The amount is in the court’s discretion and depends on factors such as the complexity of the case, the conduct of the parties and any settlement offers that were made. Costs awards can be significant, particularly after a long trial.
Settlement offers matter. Under the Rules of Civil Procedure, a party who rejects a formal offer and then does worse at trial may face adverse costs consequences. This is one reason costs risk is discussed throughout a case, not only at the end.
What ATE insurance is
After the event insurance is a type of legal expenses insurance purchased after the event that gave rise to the claim, such as an accident. It is designed to cover some or all of a plaintiff’s liability for the defendant’s costs if the case is lost, up to the policy limit. Some policies also cover the plaintiff’s own disbursements, such as expert report fees.
ATE insurance generally does not cover the plaintiff’s own lawyer’s fees. Coverage, limits, exclusions and conditions vary between policies and should be reviewed carefully.
How ATE is typically purchased
In Ontario, ATE insurance is often arranged through law firms that purchase coverage for multiple files, rather than by individual plaintiffs. Individual policies may be less common and may be more expensive. Premiums may be payable up front or deferred until the end of the case, and may be repayable from any settlement or award, depending on the policy.
Factors that may affect whether ATE is relevant
Whether ATE insurance is useful depends on the individual’s circumstances:
• Assets and income: a costs award is a debt. For a plaintiff with significant assets or income, protection against a large costs award may be valuable. For a plaintiff with no exigible assets, meaning assets that creditors can lawfully seize, the practical risk of enforcement may be different, though a costs award can still have consequences.
• Size and risk of the claim: the larger and more contested the case, the larger the potential costs exposure.
• Policy terms: limits, exclusions and conditions, such as requirements to follow the lawyer’s advice on settlement, can affect the value of coverage.
• Cost: the premium and how it is paid affect the net recovery.
A consideration: effect on the defence
Some commentators have argued that ATE insurance can have an unintended effect: by giving the defendant a secure source from which to recover costs if the plaintiff loses, it may reduce the pressure on the defence to settle. Others see ATE primarily as protection for plaintiffs. Whether either effect occurs in a particular case is uncertain, and it is a factor some people weigh when considering ATE.
Questions to ask about ATE insurance
• What exactly does the policy cover: adverse costs, my disbursements, or both?
• What is the coverage limit, and is it adequate for this case?
• How much is the premium, when is it payable, and who pays it?
• What conditions apply, and what could cause coverage to be denied?
• What happens to coverage if I reject a settlement offer against advice?
• How does the premium affect my net recovery?
Costs in accident benefits disputes
Costs work differently at the Licence Appeal Tribunal. Accident benefits disputes before the LAT are generally not subject to the same “loser pays” costs approach used in the courts, although the tribunal may have limited powers to award costs in particular circumstances. ATE insurance is therefore usually discussed in the context of court actions, such as a lawsuit against an at-fault driver or an occupier, rather than LAT proceedings.
Costs risk during the case
Costs risk is not confined to trial. Motions, refusals to answer questions, and unsuccessful procedural steps can each lead to costs orders during a case. A policy’s coverage of interim costs orders, if any, should be checked. Understanding when costs exposure may arise helps a claimant make informed decisions throughout the lawsuit, including about settlement offers. These questions are best discussed early in the case, when decisions about how to proceed are being made.
Conclusion
After the event insurance in Ontario should be assessed against the litigation risk and policy terms. Contact Booni Law at admin@boonilaw.com or +1 (226) 271-1751 to discuss the questions. No outcome is promised.
Frequently Asked Questions
Do I have to pay the other side’s legal costs if I lose?
You may be ordered to pay part of the other side’s costs. The amount is in the court’s discretion.
Does ATE insurance pay my own lawyer?
Generally, no. ATE insurance typically covers adverse costs and sometimes disbursements, not your own lawyer’s fees.
Is ATE insurance required in Ontario?
No. It is optional, and its usefulness depends on your circumstances.
Can I buy ATE insurance myself?
Individual policies may be available but are often less common and more expensive than coverage arranged through law firms.
Questions about costs risk in your case?
If you are considering a personal injury claim and want to understand costs risk and how it may be managed, Booni Law can explain the general considerations that apply. Email Booni Law at admin@boonilaw.com or call +1 (226) 271-1751. This article does not indicate whether any particular insurance product is available; outcomes cannot be guaranteed.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Reading this article does not create a solicitor-client relationship between you and Booni Law. The information in this article may not reflect the most current legal developments and should not be relied upon as a substitute for professional legal advice tailored to your specific circumstances. If you require legal advice, please contact Booni Law.
