ATE policy not a CCA

Tilby v Perfect Pizza Ltd (SCCO NLJ 15 March)

The claimant instructed solicitors under a conditional fee agreement accompanied by after-the-event insurance, the premium for which did not become payable until the insured risk arose. The defendant argued that the contract of insurance constituted an agreement for credit in respect of payment of the insurance premium and that as the statutory requirements for a credit agreement had not been met, the premium was not recoverable. It was agreed that if the insurance policy were a credit agreement it was covered by the Consumer Credit Act 1974 and did not comply with the Consumer Credit Regulations. The judge rejected the defendant’s argument that the normal practice in insurance business to pay the premium when insurance was taken out applied to ATE insurance, because this was an entirely new product, in respect of which there was as yet no established normal business practice. He accepted the claimant’s argument that, taken together, the insurance policy and the conditional fee agreement made it clear that the insurance cover extended to all necessary steps in relation to resolving the claimant’s claim, including her claim to be paid her reasonable costs. In those circumstances the insurance policy was still in force, the case not yet having been concluded. Since the claimant had been successful in her claim for damages she was now aware that she would be liable to pay the insurers the premium upon the conclusion of the case. That was once the costs had been finally assessed. Accordingly, the ATE insurance policy in the instant case was not a credit agreement.