Executor Insurance

If you are acting as an executor or administrator, this page will help you understand your potential liabilities.

Sometimes, legal firms will use different terms for these roles, as explained below:

• An Executor is a person named in a will to carry out the wishes of the deceased.

• An administrator is appointed by the court to administer an estate.  This happens when there is no will or the executor named in the will is unable or unwilling to serve the estate. An administrator is sometimes referred to as a personal representative.

From this point, we will use the word ‘Executor’ to describe these functions.

You need to know, that your role of executor continues for life:

• If you fail to fulfil your obligations to disburse the estate in line with the wishes of the deceased you can be personally  liable.
• If you do not adequately insure the deceased's assets or protect the beneficiaries from future financial loss, you could become personally liable for these losses.

So you must take the time to review the various types of executors insurance available to protect you, any other personal representatives and the beneficiaries.

The potential liabilities you face include:

Liability for mistakes.

Executors can be held liable for any mistakes they make in carrying out their duties. This could include:

• Incorrectly calculating the value of the estate including assets, investment, and property.

• Paying incorrect taxes to the HMRC.

• Failing to pay any outstanding debts and final bills.

• Failing to distribute the estate correctly to the beneficiaries.

• Failing to insure any property correctly

Liability for inheritance tax.

Getting this right is crucial. If you underpay, you may be liable to pay the difference to the HMRC. If you overpay or incur penalties for late payment, you are also personally liable. This usually entails reimbursing any beneficiaries who are out of pocket as a result.

Liability for claims against the estate.

If someone claims against the estate, in the absence of insurance, the executor may be personally liable for:

• defending the claim and paying the legal fees

• paying any award

• paying any out-of-pocket expenses

This is why you need to exercise your role with care. Your actions could have legal and financial consequences for you and others, including:

• Other executors or administrators involved in the estate;

• The beneficiaries

Equally, the actions of other executors could also expose you.

You could appoint a legal professional to help guide you.  They can take on the responsibility of ensuring some of this is done correctly.  Such as correctly distributing the estate and paying any inheritance tax.

It is common for lay executors to work with a professional to administer the estate.  If this is the case in your situation, you still need to remain cautious.  This is because each executor is jointly responsible for mistakes made by another.

This is why arranging suitable executor insurance can be a sensible move.  It will not only protect the executors but also the beneficiaries.  The last thing any executor wants is for beneficiaries to have to pay back some or all of their inheritance.

Executors should consider the following insurance types:

• Unoccupied Probate Property Insurance. Property is usually unoccupied during probate. Insuristic has developed a specialist insurance product for this scenario.

• Insurance for property occupied during probate. Property in probate is sometimes occupied by people living there with the permission of the executors. This is becoming more common and can be challenging to find an insurance provider to cover this. Insuristic has developed a home insurance product where property can be insured in the name of the estate.

• Land Insurance - If the deceased owned plots of land that aren't contained in their home deeds this should be considered. A landowner has a duty of care to protect visitors (there legally or otherwise) from injury. Land Insurance can protect the estate's liability to third parties who have been injured or suffered property damage on the land.

• Section 27 Indemnity Insurance. You might have already placed a section 27 notice. A Section 27 notice is a legal document that is placed in The Gazette and local papers to inform creditors and beneficiaries of the death of an individual and the intention to distribute the estate. It is required under Section 27 of the Trustee Act 1925 and helps to protect the executors of the estate from claims that may be made against them by creditors or beneficiaries who were not aware of the death. You can find out more about Section 27 notices here.

  • However, a Section 27 Notice does not protect the beneficiaries from claims from creditors. A Section 27 Insurance policy protects both executors and beneficiaries from claims from creditors.

• Early distribution insurance. Provides cover if the estate is distributed during the statutory 6-month period. It protects against claims made by unknown dependants who feel that they have been unfairly excluded by the estate. This can result in a claim, which without insurance can impose liabilities on the executors and beneficiaries.

• Missing Beneficiary Insurance. Covers claims from beneficiaries who were unknown or missing at the time of the estate's distribution. 

• Missing Will Insurance. Covers claims from people claiming there is another newer will which should have been used as the basis for distributing the estate. 

These executor insurance covers provide peace of mind for all the executors, personal representatives and beneficiaries. The cost of which can be reclaimed from the estate at the point it is distributed.

In addition, executors can buy a range of Asset Searches to help reduce their risks and streamline the estate administration process.

You can find out more on these executor insurance covers and Asset Searches below plus in what order they should be considered.

If you are acting as an executor, the first question you may have is how much is all this going to cost and who is paying for it?

The answers to these questions may become a little more urgent if the estate is asset-rich but cash-poor.

Executors can incur a lot of expenses during probate. These expenses are often paid out of their funds or the funds of the beneficiaries.

These expenses can come from arranging insurance, appointing legal providers, paying property managers, valuing the estate, selling property, paying utility bills and more.

The costs of administering an estate can add up quickly. Even though expenses can be reclaimed once the estate has been distributed, this can take 12-18 months or more.

But there is another way. If you are working with a professional, ask them if they are using Insuristic Estate Finance.

Insuristic Estate Protect is a low-interest drawdown facility backed by FSL Finance. It has a pre-agreed limit of £15,000 and a minimum drawdown of £495:

• It is only available for professional firms that use Probate Pro.

• The cost of the funding is low at 1.5% per month.

• There is nothing to pay until the estate is distributed.

• The cost is repaid as an estate expense when the estate is distributed.

This may help you arrange better insurance and legal services to fully protect the estate, executors and beneficiaries, without the worry of the cost.

It is your responsibility as the executor or administrator to ensure the property and any land owned by the deceased is insured properly.

So as a first step you should review the insurance for any:

• Unoccupied Property;

• Occupied Property; and

• Land Insurance

Read on to find out more.

It is the responsibility of the executors to arrange suitable property insurance. In the event of a loss, failure to do so could result in the executors becoming legally liable to put things right.

Imagine if there was a major incident at the property that wasn’t insured correctly, such as a fire or flood.

This could result in a significant financial liability for the executors. Particularly as the beneficiaries will seek to be reimbursed for any uninsured losses.

You shouldn't rely on the deceased's insurance either (if the policy is still current). The policy will likely have been arranged for an occupied property and may not be appropriate.

Here are some common issues when relying on the existing insurance:

• The property needs to be arranged in the name of the estate. This ensures the proceeds of a claim have somewhere to go i.e. the estate. The property should not be insured in the name of the executor or beneficiaries. The insured name should be 'The Executors of Name of Deceased' if there is a will. If there isn't a will, the insured name should the 'The Administrators of Name of Deceased'.

• Many insurers are reluctant to insure property that is continuously unoccupied. This is usually 30 days although some insurers might provide unoccupied cover for 60 days. When the property becomes unoccupied you need to notify the insurer immediately. If the insurer agrees to provide cover and update the insured name, you will  likely have new policy conditions to consider:

  • The existing insurer may restrict cover with new policy conditions. Common conditions involve restricting escape of water cover, improving security or increased excesses.

  • The unoccupied property will need to be inspected. You may also need to arrange for the property to be inspected every 7 days. Some insurers might extend this to 14 days.

• What if the property is underinsured? This can leave the executors with a financial liability in the event of a claim. More on that later.

The policy conditions need to be fully understood by all executors.

Remember, all executors are liable for mistakes made by another. So one executor failing to comply with a policy condition can create a liability for all.

Imagine that the property has had its water systems drained down. But one executor refills the system to put the heating on whilst visiting the property. If there is now an escape of water claim that isn't insured, all executors would have to foot the bill.

You can get a quote on our unoccupied probate property insurance page

The Risk of Building Underinsurance for Executors

When you are arranging insurance for property during probate you need to be careful not to underinsure it. If you provide the wrong rebuild cost during the quotation you could be in for a shock when it comes to a claim.

The impact of underinsurance could be:

• that an insurer declines to pay a claim if the property is significantly underinsured; or

• they reduce the claim by the amount of underinsurance.

• The beneficiaries blame the executors for failing to arrange the correct insurance on the property. This could mean they ask the executors to refund any loss as a result of the underinsurance. This could be significant if you imagine a property with a rebuild of £500,000 but was insured for a market value of £400,000. The shortfall would be £100,000.

If you want to find out more, check out Insuristic's article for Today's Wills and Probate Magazine: The risk of building underinsurance for executors.

How Insuristic can help you avoid Building Underinsurance

If the property has 4 bedrooms or less and a rebuild value below £750,000, we work out the rebuild cost for you behind the scenes. 

The policy you buy then has £750,000 building sums insured as standard, meaning you don’t need to worry about underinsurance, providing you are confident your property rebuild valuation is below this figure. If you are unsure whether it is or not, we would recommend completing a rebuild cost assessment to be on the safe side.

If the property is likely to exceed a £750,000 rebuild valuation, you can speak to our underwriting team directly at SJL Insurance.  They will be able to provide advice, tell you how to get a valuation and then provide insurance based on a true rebuild cost.

Alternatively, you could arrange a rebuild valuation yourself. BCH are a specialist in building insurance valuations and has offered a discounted price for Insuristic customers. You can arrange a building rebuild valuation for £100+ VAT on the BCH website here.

But don’t worry if this all seems daunting.

Insuristic is a specialist in Probate Insurance. We have developed a product specifically designed for insuring unoccupied property in probate. We can cover unoccupied houses, flats or maisonettes.

• You will find our policy conditions easy to understand and well-explained on our probate house insurance page.

• The policy is easy to arrange online in a couple of minutes.

• There is no compulsory requirement to drain down water systems on our Gold and Silver policies. We just cap the value of escape of water claims where this hasn't been done.

• Our policyholders only need to inspect probate property every 30 days. There are no written reports to complete. Inspections can be evidenced by two pictures taken with a mobile device, one of the outside and one of the inside of the property. Inspections can be done by anyone. The pictures only need to be shown to the insurer in the event of a claim.

Properties aren’t always empty during probate. Sometimes property is occupied by dependents, beneficiaries or tenants of the deceased.

Whilst this may sound reasonable, it may cause problems for your insurance:

• The property still needs to be insured in the name of the estate until it is distributed. The property can't be insured in the name of the people living there as they have no financial interest in it. If there is a claim, the proceeds need to go to the Estate.

• Insurable interest won't be clear to the insurer. If the property is occupied the estate is effectively acting as a landlord. Which means a standard home insurer may struggle to insure the property;

• Landlords' insurance policies require a tenancy agreement to be in force. This is unlikely if the property is occupied by the dependents or beneficiaries. Without a tenancy agreement, the landlord's policy will be invalid

• Many providers of probate insurance only cover unoccupied property. These policies are often not suitable for occupied properties.

These are issues for executors when arranging probate insurance for occupied property.

But don’t worry, Insuristic can arrange a home insurance product that:

• You can insure in the name of the estate; and

• Provides cover whilst it is occupied. The occupants will need to be living there with the permission of the executors;

If the deceased owned land, such as a private road, development sites, grazing land, moorland etc., there is a liability exposure for the executors.

• If someone accidentally injures themselves or damages their property on the land, they could claim damages against the estate.

• The claimant could be on the land with permission or trespassing.

• The land should also be insured in the name of the estate.

To buy online in a couple of minutes, check out our landowner's liability insurance page.  The land can also be insured in the name of the estate.

In the interim, our broking team at SJL Insurance can provide you with a quote over the phone. Please send us a message via our Contact Us page and we will be in touch.

If you are acting as the executor, administrator or personal representative there are several Asset Searches for you to consider. These searches will help protect your risks and those of the other administrators and beneficiaries.

These searches are also often recommended to support the insurance application process.

All of these asset searches can purchased by lay executors (private individuals) or professionals alike.

Read on to find out more.

In the aftermath of a loved one's passing, the handling of their estate often falls upon executors, who are tasked with ensuring the deceased's final wishes are carried out as intended.

A crucial step in this process is conducting a Certainty Will Search, a comprehensive procedure that helps locate any existing Wills, including those that may not be registered.

You can find out more about a Certainty Will Search by clicking the button below.

Most people lead a digital life. if you need help locating:

• Cryptocurrency exchanges

• Marketplace providers

• Online shopping accounts

• Gambling providers

• Online and Social Media Presence

• Registered email and domains

And more, this low cost asset search will help.

You can find out more about a Digital Asset Search by clicking the button below.

Executors need to locate all the assets due to an estate and must be able to demonstrate that they have conducted a thorough search of where assets may have been held by the deceased. 

Inheritance Data offers a comprehensive search for all assets that are due to an estate to give Executors and Administrations peace of mind whilst fulfilling their professional duty.

You can find out more about a Financial Asset Search by clicking the button below.

Professional Executors or Administrators, Deputies or Attorneys are duty-bound to identify and settle any estate debts and liabilities.

If the deceased has any liabilities that are not clear at the time of passing, any creditors can claim payment from the Legal Representative or funds paid to beneficiaries. 

So protect yourselves and find out more about a Liability Search by clicking the button below.

The NI Number is not always readily available when the administration of an estate is in motion. Where this is the case it can provide a multitude of complications and delays.

Thankfully you can buy an NI Number Search, which takes around 14 days to complete and can seamlessly be used as part of our Financial Asset & Liability Search request. 

You can find out more about an NI Number Search by clicking the button below.

If the estate is large or complex, a professional probate genealogist can help significantly. They can help you trace missing beneficiaries or next of kin, help you fill in the blanks and also help solve complex inheritance questions.

You can find out more or find a genealogist by clicking the button below.

Section 27 of the Trustees Act 1925 gives the right to the trustees, executors and personal representatives to safeguard themselves from any claims or liabilities while distributing or conveying a questionable property.

They can do so by publishing the Section 27 Notice in the Gazette and local newspapers as per the specifications mentioned in the section.

You can find out more about arranging a Section 27 Notice by clicking the button below.

When you have received the Grant of Probate or Letters of Administration (if there isn't a Will) you may want to consider the following insurance policies:

• Section 27 Insurance - provides insurance protection against claims from unknown creditors after the estate has been distributed
• Early Distribution Insurance - protection if you wish to distribute the estate without waiting for the 6-month waiting period to end.

Read on to find out more.

Early distribution insurance is an important executor insurance cover. It protects executors and beneficiaries from claims by known dependants that fall under the Inheritance Act 1975.

The Act allows people to make a claim against an estate if they feel they have been unfairly excluded when the estate is distributed.

Executors usually have to wait 6 months after the Grant of Probate is issued before they can distribute the estate. This is to provide enough time for claimants to come forward. This is a requirement under the Act also.

However, it is not always possible to wait this long. Particularly if the beneficiaries need access to their inheritance quickly. Or perhaps there are bills the estate needs to pay.

Early distribution insurance can help in this scenario. Executors can distribute the estate with insurance during the 6-month waiting period. If any unknown dependants come forward this insurance policy protects the executors and beneficiaries from any liability.

Another type of executor insurance policy that should be considered when you have received the Grant of Probate is Section 27 Insurance. It provides insurance against unknown creditors making a claim against the estate after distribution.

Executors are encouraged to place a section 27 notice to protect their liability should an unknown creditor come forward. However, in the absence of insurance, this does not protect beneficiaries.

It is also possible that the executors did not place a Section 27 notice.

A Section 27 Insurance policy protects the executors, personal representatives and beneficiaries against claims from unknown creditors.

As the cover starts from £89.60 including Insurance Premium Tax it can be a wise purchase. The price will vary depending on the size of the estate but can provide valuable peace of mind to executors or administrators.

When the estate is ready to be distributed you should consider the risks associated with a newer will being found after the estate has been distributed. You may also want to consider protecting against the risk of a known or missing beneficiary coming forward in the future to claim against the estate.

Read on to learn about the insurance you can buy to protect against this.

Insurance can be purchased to protect against the risk of a newer Will being discovered in the future.

It is a risk that a newer will is found that changes how the estate should have been distributed. This could result in significant legal costs for the executors. It is also possible that the previous beneficiaries aren't in the newer will or are listed as receiving a lower amount. This could mean that all or part of the inheritance needs to be repaid.

A missing will insurance policy protects the personal liability of the executor, personal representatives and the beneficiaries. It also protects the other beneficiaries so they won't need to repay all or part of their inheritance.

Any successful claimants will be reimbursed by the policy, which will also cover any associated legal costs.

Protecting against the risk of a missing beneficiary making a claim against the estate is another important consideration when arranging executor insurance.

Missing beneficiary insurance provides protection for executors and beneficiaries if:

• A known beneficiary can't be contacted at the time of distribution and later comes forward to claim against the estate.

• An unknown beneficiary claims against the estate after it is distributed.

The policy protects the personal liability of the executor and the beneficiaries. The policy compensates the missing beneficiary and covers any legal costs. This means that other beneficiaries won't need to repay part of their inheritance.

Your insurer will need to see sight of a genealogy report produced by a professional genealogist as part of the quotation process. You can find out more or contact a genealogist here.