The Costs of Losing: Indemnity Costs and ATE Insurance in Will Disputes

Contentious probate is notoriously expensive, with legal fees often reaching six figures. The standard rule in UK litigation is that “the loser pays the winner’s costs,” but in Will disputes, this is just the beginning. This article breaks down the terrifying reality of Indemnity Costs, a penalty rate of costs awarded when a party’s conduct is deemed unreasonable—and the essential role of After the Event (ATE) Insurance. We explain how ATE insurance acts as a safety net, protecting claimants from the ruinous costs of a lost case, and why understanding the “cost-benefit” of an inheritance claim is the most important decision a beneficiary will ever make.

The “Loser Pays” Rule and Its Exceptions

In most civil cases, the court follows the Civil Procedure Rules (CPR) Part 44. However, in probate, there are two rare exceptions where costs might be paid out of the estate:

1. If the testator’s own actions (e.g., a confusingly drafted Will) caused the dispute.
2. If the circumstances reasonably required an investigation into the Will’s validity.

Outside of these exceptions, if you challenge a Will and lose, you are personally liable for your opponent’s costs. This can be devastating.

Outside of these exceptions, if you challenge a Will and lose, you are personally liable for your opponent’s costs. This can be devastating.

Standard vs. Indemnity Costs: The Penalty Rate

When a court orders a party to pay costs, it usually does so on the “Standard Basis,” meaning only “proportionate” costs are paid. However, if a party has been dishonest, refused to mediate, or pursued a “frivolous” claim, the court may award Indemnity Costs.

• The “Doubling” Effect: On an indemnity basis, the court no longer cares about “proportionality.” The loser must pay almost all of the winner’s actual costs, often resulting in a bill 30-40% higher than the standard rate.

ATE Insurance: Your Financial Shield

Given the risks, many claimants utilize After the Event (ATE) Insurance.

• How it works: You take out a policy after the dispute has begun. If you lose, the insurer pays your opponent’s costs and your own “disbursements” (like court fees and expert reports).
• The Premium: You typically only pay the insurance premium if you win. The cost is often a percentage of the inheritance recovered.
• Why it matters: It turns a “bet-the-house” litigation into a calculated risk. Without ATE, many valid inheritance claims would never be brought because the risk of losing is too great.

Navigating the Financial Minefield

We provide Authority on the latest cost rulings, Education on funding options, Empowerment to bring a claim safely, Empathy for the financial stress families face, and Urgency in securing ATE cover before the trial window closes.

Let’s Do This Together

Contesting a will could become an overwhelming experience if not accompanied by expert guidance and support. Our mission is to provide you with all the needed information, support, and authority to get through this journey, with only one goal in mind: Fairness.

To our team, this process is not about winning; it’s about claiming what was yours from the beginning.

Read our guide on how to cope with the emotional toll of contesting a will: The Emotional Toll of Contesting a Will and How to Cope: Legal Grounds and When Not to Contest a Will

Get your free, no-obligation case assessment. Call 08002980029 or visit contestawilltoday.com

FAQs

1. Can an Executor be forced to pay costs personally?

Yes. If an executor “stops being neutral” and fights a beneficiary in a way that is deemed unreasonable, the court can issue a “Costs Order” against them personally, meaning they cannot use the estate’s money to pay their lawyers.

2. Does ATE insurance cover my own solicitor’s fees?

Usually, no. ATE insurance typically covers the other side’s costs and your disbursements (out-of-pocket expenses). Your own solicitor is often paid via a “No Win, No Fee” (Conditional Fee Agreement) or from the inheritance you recover.

3. What is a “Beddoes Order”?

A Beddoes Order is a protective order an executor can seek from the court. It gives them permission to use estate funds to pay for litigation, essentially “pre-approving” their costs so they aren’t personally liable later.