Which type of insurance might a CFA client take out to cover costs if they lose?

• A. Before the event insurance policy.
• B. After the event insurance policy.
• C. Legal aid policy.
• D. Medical insurance policy.

Answer: (B)

The idea being tested is protection against the risk of paying the other side’s costs if a claim fails. After-the-event insurance is specifically designed to cover legal costs, disbursements, and the opponent’s costs if the case is lost, providing financial protection for a client pursuing or defending a claim. That makes it the most suitable option for a CFA client who wants to mitigate adverse costs exposure.

Before-the-event insurance would cover different, pre-claim risks and isn’t tied to the outcome of a specific case. A legal aid policy isn’t private litigation insurance of this type, and medical insurance covers health costs, not legal costs.