Do ATE Insurance Policies Protect Against A Security For Costs Order?

The Court of Appeal has recently overturned a High Court decision and limited the circumstances in which an After the Event (ATE) insurance policy can be used to defeat an application for security for costs. What should claimants and defendants consider when deciding whether to offer or accept such a policy?

The guidance in Premier Motorauctions Ltd v PricewaterhouseCoopers LLP will be of particular relevance for impecunious claimants (who otherwise face having to pay cash into Court or to produce a bank guarantee) and for parties defending claims brought by them. In a rapidly evolving area, it is important for parties and practitioners to understand the limits of relying on ATE insurance in these circumstances - an ATE policy is not necessarily a silver bullet.