After the event insurance (ATE), also known as legal costs insurance legal insurance, is now widely available in Canada. It can be purchased by a claimant to cover or offset litigation costs in both automobile and non-automobile personal injury litigation.
A typical policy costs under $1500.00 and usually covers $100,000.00 in costs including:
defence costs and disbursements awarded at trial; the claimant's disbursements and any interlocutory costs orders; coverage for costs awarded for failing to beat a settlement offer, and the claimant's disbursements in the event that he or she abandons their claim.
The law with respect to ATE insurance is developing as this insurance product is being more widely purchased. In the recent case of Wynia v. Soviskov, 2017 BCSC 195 the BC Supreme Court addressed the issue of whether the premiums associated with purchasing litigation insurance are compensable disbursement under the Supreme Court Civil Rules. Ultimately, the plaintiff was not permitted to recover these costs.
While such insurance provides a measure of financial comfort to the plaintiff, the Court found that the premiums not arise from the exigencies of the proceeding and do not relate directly to the direction, management, or control of the litigation used to prove a claim against the defendants. In short, in order to be recoverable there must be a causal connection between the issues in the case and the expense incurred to prove or disprove them.
This result is similar to the decision in Markovic v. Richards et al, 2015 ONSC 6983, an Ontario case in which the plaintiff sought to recover the premium as a disbursement. Justice Milanetti concluded that the premium should not be a compensable disbursement because it is entirely discretionary, does nothing to advance the litigation and may even act as a disincentive to thoughtful, well-reasoned resolution of claims.