Adverse Cost Insurance: Evolving Case Law

A growing issue in personal injury litigation has been the propagation of adverse cost insurance, also known as "after-the-event" insurance. This insurance is typically a policy purchased by a plaintiff in a lawsuit to provide protection in the event of a judgment for costs against a plaintiff if they are unsuccessful at trial. The advent of adverse costs insurance has been celebrated in some corners, primarily on the view that it "levels the playing field" and provides access to justice for plaintiffs that would otherwise be facing the risk of a costs award. An insurer that disputes an action to trial may also take some comfort that a successful verdict could result in the recovery of some costs against an otherwise impecunious plaintiff. However, there is a concern that adverse cost insurance will be an impediment to the litigation process, from attempts at settlement to the conduct of the parties throughout the litigation to trial.