Can the same policy cover both adverse costs and funder capital?

Some specialist insurers offer blended structures that combine ATE and CPI cover within a single placement, but the underlying exposures are still treated as distinct insurable risks. Most funders and claimants buy the two products separately because the trigger events, insured parties and waterfall implications are different.

Is CPI more expensive than ATE?

Pricing depends on case profile, jurisdiction, and the insurer's view of merit, but CPI premiums (typically 3% to 12% of sum insured) sit in a different range than ATE premiums (typically 30% to 60% of insured limit, deferred). The headline rates are not directly comparable because ATE premiums are deferred and contingent while CPI premiums are usually paid upfront on an annual or per-case basis.

Does the claimant benefit from the funder's capital protection insurance?

Indirectly. CPI cover reduces the funder's net exposure, which can translate into more favourable funding terms — larger drawdown facilities, lower return multiples, or willingness to fund borderline cases. However, CPI does not pay out to the claimant; subrogation and recovery rights flow to the insurer and the funder.

ATE Insurance vs Capital Protection Insurance

Key Takeaways

✓ATE insurance protects the claimant against adverse costs orders if the case is lost
✓Capital protection insurance protects the litigation funder against loss of deployed capital
✓ATE premiums are usually deferred and contingent on success; CPI is typically annual or per-case
✓ATE is a mainstream general insurance product; CPI sits in specialist financial lines
✓Many funded cases now use both products to provide comprehensive risk transfer

Understanding how capital protection insurance works is essential before exploring specialized funding options for specific practice areas.

ATE vs CPI: Quick Summary

ATE insurance protects the claimant against adverse costs orders if a case is lost. Capital protection insurance protects the litigation funder against loss of capital deployed if the case fails to recover. They cover different parties, different exposures and respond to different trigger events.

Who Is the Insured Party?

ATE policies are taken out in the name of the claimant (or sometimes the law firm acting for them). The benefit of the policy responds to costs orders made against that claimant.

CPI policies are taken out by the litigation funder — or, increasingly, by an SPV established to ring-fence a single case or portfolio. The benefit responds to the funder's own balance sheet exposure on the funded investment.

What Each Policy Covers

ATE: Adverse costs orders (the defendant's legal costs), the claimant's own disbursements (in many policies), and security for costs requirements.
CPI: The funder's deployed capital — solicitor fees, counsel fees, expert disbursements and other case costs advanced under the funding facility.

Crucially, CPI does not cover the funder's anticipated profit or contracted return multiple. It is an indemnity for capital lost, not a guarantee of investment yield.

Trigger Events Compared

ATE trigger: An adverse costs order is made against the insured claimant following an unsuccessful outcome.
CPI trigger: The funded case results in a recovery below the funder's deployed capital — whether by judgment, settlement, claimant insolvency, or discontinuance.

See our CPI policy structures guide for a detailed breakdown of CPI trigger events and exclusions.

Cost & Premium Structures

ATE premiums: Typically 30–60% of the insured limit, almost always deferred and contingent on success in funded matters. The claimant bears no upfront cost.
CPI premiums: Typically 3–12% of the sum insured, usually payable upfront on an annual or per-case basis. Deferred CPI structures exist but typically carry a higher rate.

Regulatory Treatment

In the UK, ATE is treated as a mainstream general insurance product. CPI is positioned in the specialist financial lines market, often placed via Lloyd's syndicates with dedicated litigation risk capacity. In the US, both products interact with state-level insurance regulation and, in some jurisdictions, with champerty and maintenance considerations.

Combining ATE and CPI

Many sophisticated funded cases now use both products. ATE handles the claimant's costs liability; CPI handles the funder's capital exposure. The two policies operate independently — there is no double recovery — and together they create a comprehensive risk transfer envelope that can unlock funding terms not otherwise achievable.

Conclusion

Understanding the distinction between ATE and CPI is essential for claimants, law firms and funders evaluating risk transfer options. To discuss combined ATE and CPI cover for your case or portfolio, submit an enquiry.

Frequently Asked Questions

Ready to Explore Funding Options?

Get a confidential case assessment from our litigation funding experts.

Submit Your Case