Contingent liability insurance is a bespoke solution designed to cover specific known risks that would likely be excluded under other forms of insurance.

A contingent risks policy is designed to cover the specific financial exposure of the insured in the event of an adverse outcome in the resolution of the contingent liability, including:

  • damages or settlement costs
  • defence costs, including the expenses involved in engaging legal or other professional expert advisors
  • additional cover for any other potential liabilities that might arise in the context of a particular dispute

Why use it?

The insured can transfer the risk of actual or potential contingent claims to an insurance policy and ring-fence any future financial exposure.

Contingent liability insurance can also release potential opportunities for sale or acquisition that might be precluded by a particular dispute or risk.

The policy can be tailored to the needs of the insured, regardless of the subject matter or jurisdiction. Coverage can range from something as simple as a breach of a supply contract or dispute with an employee through to highly complicated intellectual property or product liability litigation.


Phase 1

· Provide high-level information on the risk for an initial view from RCA on the insurability and the likely cost.
· Depending on the complexity and commercial sensitivity RCA may have no-names discussions with select insurers to obtain initial market feedback.
· Minimum information required is a high-level description of the potential liability and the broad advice received from the insured’s advisers.

Phase 2

· Depending on RCA’s review of the documents and on the complexity and whether or not the contingent liability is something that insurers are sufficiently comfortable with, insurers may provide an NBI subject to receipt of additional detailed information, favourable advice and supporting documents.
· Insurers provide an NBI based on the information provided or RCA liaises with the insured to provide further information to enable insurers to issue an NBI.

Phase 3

· RCA liaises with insurers on proposed scope of coverage and reports to the Insured and advisers with a recommendation.
· The recommended insurer is appointed to underwrite.
· Depending on the stage and complexity of the risk is (for example a historic risk rather than a structure that has not yet been entered into), a phased approach to the underwriting may be required, with the insured committing to cover the insurer’s fees for an initial stage review, followed by a final phase.
· RCA advises on potential risk-sharing structures and alternative approaches to obtaining the required cover.
· All relevant documents and analysis are provided to the insurer for review by them, and potentially their external advisers.

Phase 4

· RCA works closely with the insurer, the insured and the insured’s adviser to draft and agree a policy, bespoke to the risk(s) to be insured.
· Final documents any final opinions or other advice are presented to the insurer and the policy finalised.