Practitioners in the field of insurance claim litigation know that this area of the law presents special challenges. Insurance companies need quick and convenient access to data for the claim and legal case management. Companies also need software that can track claims, policy information, and loss and reserve amounts.

What is Claim Litigation?

Funding and insurance engaged in commercial litigation in Melbourne are sometimes compared as ways to help litigants reduce their risk when bringing contingency fee-based claims. At first glance, funding and insurance may appear to be similar, however, they are distinct tools with substantially different methods and benefits.

Litigation funding occurs when a third-party provides non-recourse financing for all or a part of a claimant’s litigation costs while the case is pending in exchange for an agreed-upon share of the recovery. Litigation insurance also covers legal expenses, however, potential payment from the insurance company occurs once a matter has concluded.

While litigation funding and insurance can be used by claimants with any socio-economic background, insurance tends to attract deep-pocketed claimants who can afford to fund expenses through a lengthy litigation process, whereas funding appeals to claimants from both sides of the tracks.

If litigation becomes inevitable, then the claim is typically handed over to legal counsel for the insurance company. The cost of claims litigation can be quite high for the insurance company once an actual lawsuit has been filled.

Conclusion

Litigation insurance generally works after the event. The insurer covers the costs in the event of a loss. Policies also allow the insured to pay premiums when the case is completed.