In the case of Kris Motor Spares Limited v Fox Williams LLP [2010] EWHC 1008 the High Court was asked to consider whether the successful party’s after the event insurance premium was reasonable and as such could be recovered from the other side. The obtained cover was for £130,000 for which the party paid a premium of £95,550, a rate of 73.5%. The paying party argued that this rate was excessive.

The court found that, “in a case where the issue is raised as to the size of the premium there is an evidential burden on the paying party to advance at least some material in support of the contention that the premium is unreasonable…[I]t [is] not in the insurer’s interest to fix a premium at a level which would attract frequent challenges; and…a Master…[is] not in a better position than the underwriter to rate the financial risk that the insurer faced.”  In this case, the paying party did not bring forward any relevant evidence and so the judge ruled that the premium could be recovered.

Parties who are contemplating after the event insurance as a safety net when nearing litigation will find this judgment comforting. The judge has clearly found that, barring strong evidence to the contrary, a premium set by the underwriter will be considered reasonable by the court.