When a missing Will emerged after an estate had been settled
Lawyers
Unknown Creditor Challenge Insurance: A Bespoke Solution for a Complex Estate Administration Matter
Not every estate administration matter fits the contours of an established insurance product. This case presented a scenario that sat outside the scope of any off-the-shelf policy, an estate that included two companies, both placed into Members' Voluntary Liquidation and subsequently dissolved, one in 2022 and the other in 2025.
Requirements
Both companies had been solvent when wound up, which is a key distinction. However, a statutory period remained during which an unknown creditor could apply to restore either company to the Companies House register and pursue a claim against the estate. At the time the policy was written, the residual exposure was approximately two years for the first company and five years for the second. For the administrator and the beneficiaries, this was not a theoretical risk, it was a live and quantifiable one, with the potential to resurface years after the estate had been distributed.
The case shared many of the characteristics of a traditional Section 27 Trustee Act 1925 Insurance policy, under which executors and beneficiaries seek protection against unknown creditors following the placement of the appropriate statutory notices. Section 27 insurance is well established and widely used in the majority of estate administration matters, it provides the right level of protection.
Here, however, a standard Section 27 policy would not have responded. The reason was structural before any creditor could enforce a claim; they would first need to restore the dissolved companies to the register. That preliminary step, the act of restoration itself and the costs flowing from it, fell outside the scope of a conventional Section 27 wording. The gap in cover was narrow but significant and leaving it uninsured would have required the administrator to retain a substantial reserve within the estate for an indeterminate period.
Our Solution
Our underwriting team worked to construct a bespoke 'Unknown Creditor Challenge Insurance' solution that extended protection to this specific scenario. The policy was structured to cover three distinct elements: the costs of defending a claim, the costs of restoring the companies should this be ordered by the Court and any resulting liability that could otherwise require the administrator or beneficiaries to repay distributed funds.
The policy was written with a £250,000 limit of indemnity and attracted a premium that represented a cost-effective alternative to retaining a substantial reserve within the estate.
The Results
For the client, the policy provided something that a retained reserve could not, certainty. Rather than holding back significant funds against a risk that might never materialise, the administrator was able to complete the estate administration and distribute to beneficiaries with confidence, knowing that the residual exposure had been underwritten and quantified.
This is the purpose that specialist legal indemnity insurance serves at its best. Where a risk falls outside standard parameters, where established products offer only partial protection, and where the cost of uncertainty is measured in retained capital and delayed distributions, a carefully structured bespoke policy allows all parties to reach a position of certainty sooner and with greater confidence.
Speak to our underwriting team
If you are dealing with a complex estate administration matter where standard insurance products do not fully address the risk, our underwriting team would welcome the opportunity to discuss the specifics with you. Whether the risk is novel, multi-layered, or sits at the edges of established policy wordings, we have the expertise and the appetite to find the right solution.
Get in touch at connect@clsq.com
Risk quantified
A bespoke policy, constructed to cover a particular set of circumstances, turned an open-ended exposure into a known and underwritten one.
Reserve avoided
With the residual exposure underwritten, there was no need to retain a substantial reserve within the estate for the remainder of the statutory restoration period.
Estate distributed
The administrator was able to distribute to beneficiaries with confidence, rather than holding funds back against a risk that might never arise.
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