Probate Insurance

What is Probate Insurance

There isn’t a specific policy called probate insurance. However, it is often used by the executors or administrators of an estate to search for the various insurance policies they need.

If you search for Probate Insurance, you will likely see companies offering probate property insurance.  However, Probate Insurance is much more than that; there are several insurance policies to consider.

There are various probate insurance policies offered by Insuristic for you to consider. We will explain these in a little more detail below, or you can click the link on each page to find out more or get a quote. 

Here are the probate insurance policies that Insuristic offers:

• Probate House Insurance – designed for unoccupied property in probate

• Section 27 Insurance – protection against claims from unknown creditors coming forward after the estate has been distributed.

• Early Distribution Insurance enables the estate to be distributed within the statutory six-month waiting period, with insurance protection against claims from unknown dependents considered to fall under the Inheritance (Provision for Family and Dependants) Act 1975.

• Missing Will Insurance – protection if a newer Will is discovered after the estate has been distributed.

• Missing Beneficiary Insurance – protection if an unknown beneficiary comes forward to claim against the estate after it has already been distributed.

Why is probate Insurance important?

The liabilities of anyone appointed as an executor or administrator can be significant. They may not be apparent for many years, so it is essential to consider all the insurance options available to you.

Beneficiaries can also be affected by uninsured losses that reduce the estate's value or impact them financially in the future following a claim from a third party.  Disgruntled beneficiaries, frustrated about their losses and lack of insurance protection, can hold executors personally liable for not protecting them.

Such losses can be financially catastrophic for executors but avoidable with adequate insurance protection.

We have written an Executor Insurance Guide, which may also be useful.

The various types of Probate Related Insurance Policies

Probate Property Insurance

You should be careful about extending any existing home insurance arranged by the deceased. 

When the existing insurer learns about the current situation, it is likely to apply policy conditions that are difficult to comply with and/or reduce the amount of cover it is prepared to provide. 

The deceased may have accidentally underinsured the property, which you would inherit by extending the property.  Any losses caused by underinsurance or a lack of cover that could have been sourced might fall to the executor to reimburse the estate, which can be very costly.

If you want to read more about this, check out our post ‘Why It's Risky To Extend Home Insurance In Probate’.

Instead of extending the existing insurance, you should consider obtaining insurance from a specialist like Insuristic.

We have developed a Probate House Insurance policy designed explicitly for Probate.

Here are the key points on our cover:

• Insure for 3, 6, 9 or 12 months

• Choose from three levels of cover, Bronze, Silver or Gold.

• Inspections are only required every 30 days, with no written reports.  Take one picture of the front of your house and one of a room inside with your mobile phone to evidence each inspection.

• Draining down water systems is not required for either our Silver or Gold Cover (but water cover escape will be capped).

• Extend the insurance policy if you need to

• There are no cancellation fees if you need to cancel early. You will receive a pro-rata refund for any unused cover.

• Easy to understand policy conditions and property inspection rules.

Landowners Liability Insurance

If the deceased owned land that isn’t contained in their property boundary, such as they owned grazing land or maybe they had some land they planned to develop, they would have been liable for any injury or damage sustained by a visitor to that land, whether there with their permission or not.

This liability passed to the executors and the estate when they passed away.

Land Liability Insurance is effectively public liability insurance for the land. It protects the executors and the estate from claims by third parties for injury or damage to their property.

Risk of Probate Insurance claims from third parties

As an executor, you and the beneficiaries will always be at risk of claims from third parties.  These claims can be from anyone:

• Who claims to have a Missing Will

• Who feels they should have benefited from the estate under the Inheritance (Provision for Family and Dependants) Act 1975 (if the estate is in England, Wales and Northern Ireland).

• Who is a creditor to the estate and was not paid when the estate was distributed.

• Who says they are a beneficiary the executors have missed when distributing the estate?

In these circumstances, you have four insurance policies available:

Missing Will Insurance.

If you have searched for a missing Will with the National Will Register, despite their huge database of Wills, there is still the chance of a Will surfacing that can change how the estate should have been distributed. 

Without insurance, the executors would need to fund all the legal costs and, if they lose, pay for the legal costs of redistribution and award them to a successful third party.  The beneficiaries may need to repay some or all of their inheritance to pay the correct beneficiaries.  If the funds are unavailable, this can be very difficult for both executors and beneficiaries.

Missing Will Insurance is an important probate insurance policy.  It protects the executors, administrators, and beneficiaries from claims when a missing Will is found and someone makes a claim against the estate.  The policy will pay for the legal costs and award to a successful third party up to the level of indemnity, which means the executors, administrators, personal representatives and beneficiaries can rest easy and move on with their lives after the estate is distributed.  If there is a claim, the insurance provider will handle everything.

Missing Beneficiary Insurance

Another important Probate Insurance policy is Missing Beneficiary Insurance. This is an important consideration for executors, administrators, and beneficiaries. It will protect them should a missing beneficiary claim a financial liability against the estate after it is distributed.

You would need to instruct a genealogist to research the family and help you identify and find missing beneficiaries.

Then you can buy insurance if a known beneficiary cannot be contacted or if you want peace of mind in case an unknown beneficiary appears.

Section 27 Insurance

You might have used a Credit Search from organisations like Experian or Equifax to highlight the deceased's loans, overdrafts and other liabilities.  However, there is still a risk that an unknown creditor could come forward after the estate has been distributed.

If the executors have placed a Section 27 Notice, they can pass this claim to the beneficiaries to settle directly with the creditor.  But this may not absolve them of all liability.  The beneficiaries could argue that the executors should have insured them against this risk and made a claim against them, forcing them to pay the creditor if the claim was successful.

Instead of placing costly Section 27 Notices, executors can arrange a Probate Insurance policy called Section 27 Insurance (once they have completed a Credit Search to identify and pay all debts).  The policy can be arranged without placing a Section 27 notice, which for smaller estates could be cheaper than arranging a Notice.

If there is a claim from a third party, the insurance provider will handle everything on your behalf.

Early Distribution Insurance

The last Probate Insurance policy to mention is Early Distribution Insurance. This policy is available for estates in England, Wales, and Northern Ireland. 

Many beneficiaries will encourage its purchase if they want to receive their inheritance within the statutory 6-month waiting period.  Many solicitors involved with the estate will require you to wait 10-months to ensure no claims come in from people who could challenge the estate under the Inheritance (Provision for Family and Dependants) Act 1975.

Instead, if there are no known dependents to the estate, you can arrange Early Distribution Insurance and distribute the estate as soon as the executors or administrators are happy that everything is in order without waiting for the statutory period.

This policy offers protection in two situations:

First, it covers cases where the estate is distributed before the required 6-month waiting period following the grant of representation under the Inheritance Act 1975.

Second, it provides protection when the 6-month period has already passed, but a dependent makes a claim after this period, which a court later validates.

What are the benefits of having adequate Probate Insurance?

If the executors or administrators of the estate arrange adequate probate insurance, both they and the beneficiaries can relax once the estate has been distributed safely in the knowledge that the risks they have insured against should be protected (if arranged adequately), thus reducing their future liabilities and the risk of financial loss.

How do you make a Probate Insurance Claim?

This depends on the insurance broker and insurance providers you work with.

Insuristic has streamlined this for its customers.

If you insure any property with Insuristic, you will benefit from an in-house claims team that can assist you at every stage, including arranging loss adjuster visits and negotiating a fair settlement with the insurers. You can find out more on our property claims page.

If you buy any of our legal indemnity insurance policies and someone makes a claim against the estate, you should not acknowledge the claim or mention the existence of an insurance policy.

Simply email CLS Property Insights directly (their email address is in the policy wording), provide your policy number and details of correspondence from the third party, and CLS Property Insights will handle everything from thereon.