Litigation insurance (also called “litigation risk insurance” or “litigation cost protection”) is an umbrella term for a number of types of insurance that help manage the financial risk of a lawsuit. It can cover a variety of exposures, including adverse judgments on appeal, attorney’s fees, court costs, or case expenses. It is typically used by plaintiffs and plaintiff law firms to provide peace of mind by protecting them from potentially adverse financial outcomes.

Litigation funding insurance protects investors like third party funders or law firms involved in funded cases. It helps ensure that if the case doesn’t succeed, the funder or law firm isn’t left with the full financial loss. In short, it helps secure and stabilize the financial structure behind funded litigation by spreading the risk. 

The cost of litigation insurance depends on several factors, including the type of case, amount at risk (the costs of the litigation), and the stage of litigation. Premiums will often be calculated as a percentage of the sum the plaintiff is insured for, and will be staged to reflect the risk profile of the matter.  In many cases, the premium can be structured so it’s only payable if the case is successful, minimizing upfront costs.

A litigation insurance broker, like TheJudge, specializes in identifying and placing the right insurance coverage for a case. They work to source quotes from multiple insurers, negotiate terms, and ensure that the policy is tailored to your risk profile. A good broker helps you understand your options and ensures that the insurer’s terms align with your legal and financial strategy.

At TheJudge, our brokers are carefully recruited for their tenacity, ingenuity, and depth of experience. Our global team brings together former litigators, class underwriters, and recognized experts in litigation risk insurance. We’re known not only for our technical expertise, and market coverage, but for pioneering innovative solutions and consistently delivering results in complex, high-stakes disputes.

Litigation buy-out insurance is used to resolve or transfer existing litigation risk—often during M&A transactions, corporate restructurings, or settlements. It allows one party to “buy out” the financial exposure of ongoing or potential litigation, clearing the way for a deal to close or a dispute to end with certainty for an involved party.

If you’re involved in litigation where the financial stakes are high, or if an unexpected judgment could threaten your business or personal assets, litigation insurance can be a smart safeguard. It’s especially valuable for companies facing uncertain legal exposure, plaintiffs funding their own cases, or investors or law firms acting on a contingency fee seeking to de-risk a portfolio of litigation assets.

Litigation insurance works by transferring some of the financial risk of pursuing a lawsuit to an insurer. Once underwritten, the insurer agrees to pay specified losses if a certain legal outcome occurs—for example, losing a case, having a judgment overturned, or facing unrecoverable fees. Policies are customized to the case and typically require the preparation of an application with supporting materials like pleadings, budgets, and expert reports to be submitted to an insurer, or a number of insurers to obtain quotes.

In most cases, the party seeking financial protection (often referred to as ‘the insured’) —the plaintiff, defendant, or funder—pays for the coverage. Payment structures can vary. Some policies allow deferred or contingent premiums, meaning the cost is only paid if the case succeeds. Law firms can arrange coverage for themselves if acting on a contingency fee or apply on behalf of their clients through a broker.

For many, litigation insurance is absolutely worth it. It provides financial security and peace of mind. Litigation insurance helps turn uncertainty into stability. The key is ensuring you get the right policy for your case, the premium is structured well, and the policy is obtained at a competitive price.

The main potential drawback is cost—particularly if a case settles quickly or risk decreases after the policy is obtained.  However, there are typically large discounts available if the case settles early. 

However, the benefit of risk transfer often outweighs these considerations, especially in high-value or high-uncertainty cases.

The terms litigation finance and litigation funding are often used interchangeably. Both can refer to an arrangement in which a third party—typically a professional litigation funder, but sometimes a law firm or another investor—provides non-recourse capital to cover legal fees and expenses in exchange for a share of the recovery if the case is successful.

However, litigation finance can also be used more broadly to describe a range of financial products designed to support legal claims, including litigation insurance.

At TheJudge, our team has extensive expertise across the full spectrum of products available to finance and de-risk litigation costs. Working in closely with Erso Capital —our strategic partner and a global provider of litigation finance—we can often tailor bespoke solutions that combine elements of both litigation funding and litigation insurance to best meet the needs of clients.

Litigation insurance and litigation funding both help manage the financial risk of legal disputes—but they serve very different purposes.

Litigation funding provides capital to pay for legal fees, expert costs, or other expenses needed to pursue a case. The funder takes on the financial risk of the litigation on the front end in exchange for a share of the recovery if the case is successful on the back end. If the case is lost, the funded party typically owes nothing back.

Litigation insurance, on the other hand, does not provide capital upfront. Instead, it offers financial protection if the case outcome is unfavorable. For example, a client may invest significant sums in litigation fees but ultimately loses their case at trial or discontinues due to unforeseen circumstances. In the event that the case is unsuccessful, litigation insurance reimburses the insured for the amounts they have paid to finance the litigation (up to the amount insured). While litigation insurance does not finance a matter, it does protect against losing money invested in litigating, and it is usually easier and quicker to obtain and significantly less expensive than litigation funding.

In short:

• Litigation funding = financing the case on the front end

• Litigation insurance = protecting against loss of money invested in litigating, reimbursement if unsuccessful on the back end

The two products often work well hand in hand – and can be used as part of a complete package to minimize risk, while maximizing the client’s net recovery.

The cost of litigation insurance that covers legal fees varies depending on the size and complexity of your case. Unlike standard insurance, litigation insurance premiums are tailored to each dispute based on factors such as:

• Total legal fees budget – larger budgets typically result in higher premiums.

• Case type and risk profile – certain case types, including complex multi-party cases, or matters with high expert costs or which typically do not conclude for many years will have larger premiums than those that are less complex and likely to conclude in a shorter time period. 

• Stage of litigation – coverage purchased at the start of a case may be priced differently than coverage purchased later in the process.

• Policy limits and coverage structure – higher coverage limits and more comprehensive protection can affect cost.

• Premium structure – many insurers provide deferred or contingent premiums, meaning you pay only if your case is successful. There may also be the option to pay a far smaller premium but it may be due upfront and remain with the insurer regardless of outcome (much like other traditional types of insurance). While others may offer the option of paying a split premium – where a smaller portion of the premium is due upfront and remains with the insurer regardless of outcome, but the remainder of premium is due only if the matter is successful.

While exact premiums vary, litigation insurance generally costs a fraction of the total legal fees you are insuring, giving you financial protection against adverse outcomes without paying the full cost upfront.

Key takeaway: Litigation insurance helps manage financial risk, giving you peace of mind while protecting your investment in legal fees. A specialist litigation insurance broker can provide multiple quotes and help structure coverage that fits your case and budget.

Litigation insurance is primarily a plaintiff-side product. That’s because the premium is usually paid from proceeds recovered in the dispute, making it most suitable for cases where there is a potential monetary award.

Defendant-side coverage is only available in limited situations. The most common examples include:

• Monetary counterclaims brought by defendants that have strong prospects of success, where there is a potential damages recovery.

• Appeal-stage coverage, where the party seeking insurance has already won at first instance (the appellee or respondent) and wants to protect that judgment through Appeal Risk Insurance.

Outside of these scenarios, litigation insurance is generally not used for defendants, since most defense matters do not result in a damages recovery from which a premium could be paid.

In short: litigation insurance is designed to protect the value of a potential recovery—not to fund or offset defense costs. However, where a defendant has a viable counterclaim or an existing judgment, arranging cover may be possible.

In the U.S., litigation insurance is designed to protect the financial investment made in pursuing a legal dispute. The exact coverage depends on the type of policy, but generally it helps reimburse legal fees, case expenses, or lost value if a case outcome is unfavorable.

Common types of coverage include:

• legal fee insurance (litigation cost protection): Reimburses a plaintiff for attorney’s fees and case expenses if the case is unsuccessful.

• Judgment Preservation Insurance(JPI): Protects a party that has won at trial from losing some or all of their judgment on appeal.

• Litigation buy-out insurance: Transfers existing or contingent litigation risk—often used in M&A or settlement scenarios to remove uncertainty from the balance sheet.

• Contingency fee insurance :  Protects a law firm acting on a no-win, no-fee or other alternative arrangement from bearing the full financial risk of the matter. 

Litigation insurance can be tailored to the stage and structure of a case. Most U.S. policies are used by plaintiffs or law firms working on contingency, where the premium is paid from a portion of the damages recovered if the case succeeds.

Litigation fee insurance—also known as own-side fee insurance or litigation cost protection—is the insurance product that covers your legal fees and case expenses if your case is unsuccessful.

This type of policy is most often used by plaintiffs or law firms working on contingency, where significant time and money are invested in pursuing a claim. If the case is lost, litigation fee insurance reimburses the insured for the attorney’s fees, expert costs, and other litigation expenses that have been incurred, up to the insured amount.

Premiums are usually paid only if the case is successful, making coverage accessible without requiring upfront payment. The result is greater financial certainty for both clients and their lawyers.

Judgment Preservation Insurance (JPI (sometimes called “Appeal Risk Insurance”) is the type of litigation insurance that protects against the risk of losing a judgment on appeal.

This coverage is typically purchased by a plaintiff who has already won at trial and wants to secure the value of that judgment while the opposing party appeals. If the appellate court reduces or overturns the award, the insurer reimburses the insured for the insured portion of the original judgment.

At TheJudge our brokers are experienced in arranging JPI insurance and can answer your questions, help you to prepare an application and arrange a JPI policy which suits your needs.