This guidance is tailored specifically for official receivers. It is discretionary
and not designed for use by third parties. This version was the most up to date
guidance available to official receivers as at 10 March 2020.
14. Insurance
Insuring an insolvent's property, including guidance on the process for obtaining
insurance cover from the contracted agent
Annexes
Insurance Guidance
- Please see
Aon guidance on the process for obtaining insurance.
Annex A – Aon Code of Practice for unoccupied buildings
Annex B – Aon Restructuring Facility Guide
Chapter content
Frequently asked questions
Introduction
Deciding whether to insure
Cover to be obtained
Stay of proceedings, annulments and post-bankruptcy IVAs
Insurance cover already in place by insolvent
Aon Insurance cover
Making a claim under the Aon scheme
Frequently asked questions
Why does the Official Receiver need insurance
cover?
In order to prevent the possibility that an asset may be lost through theft or
destruction at a loss to the estate, the official receiver must ensure that all assets
which cannot be realised or disposed of immediately are adequately insured. The
official receiver will also need cover for public liability in certain circumstances.
What do I need to insure?
The insurance must cover:
• the value of the assets to the estate
• where there are premises involved, the risk of any injury to a third party (known as
public liability) as this could result in a damages claim being brought against the
official receiver as liquidator/trustee
What do I need to consider before arranging
insurance?
You should consider the cost of obtaining insurance against the value of the assets.
In addition, you will need to consider whether insurance is needed to cover the risk
of any liabilities arising from negligence on their part or as an owner or occupier of
premises.
If the cost of any insurance is likely to exceed the net benefit to the estate, the official
receiver must disclaim their interest in the relevant assets as soon as possible.
Who do we arrange insurance cover with?
The Insolvency Service uses the Insolvency Open Cover Insurance facility operated
by Aon Insurance.
All insurance required by the official receiver, apart from in exceptional
circumstances, should be taken through Aon. Insurance and should only be taken
from another provider when Aon cannot provide the cover, or the insolvent’s existing
cover is to be continued.
What if the insolvent has existing insurance
cover?
Where the insolvent has any type of insurance cover in force at the date of the
winding-up or bankruptcy order, the official receiver should make appropriate
enquiries and not assume that this insurance will continue.
What is the Aon automatic 30 day period for
small non trading cases?
Where the case is a small non-trading case Aon offer a 30 days period in which to
notify them of an insurance requirement. The cover will date back to the date of the
insolvency order.
Where assets requiring insurance come to light more than 30 days after the date of
the official receiver’s appointment, these can be insured by Aon but the cover will
only be effective from the date Aon is notified of the assets.
What if the case is large or has unusual risks?
Where the official receiver requires insurance for larger cases and the criteria for a
smaller case are not met you should contact Aon by telephone to arrange suitable
cover.
When should I cancel insurance?
The official receiver’s automatic insurance cover must be cancelled where:
• in relation to a property, a charging order is obtained by the official receiver
• a property is repossessed under the terms of a mortgage charge or an LPA receiver
is appointed
• a disclaimer is issued
• the order is rescinded or annulled
• an insolvency practitioner is appointed
• the official receiver’s interest in the asset, as liquidator or trustee has otherwise
ended
Why is it important to cancel insurance?
It is important that insurance is cancelled when it is no longer required to minimise
premiums. Insurance should be cancelled within 5 working days of it being deemed
no longer required.
Please note that insurance is never automatically cancelled with Aon at any time.
Cover will only cease when Aon have been directed to cancel the insurance by the
Official Receiver.
Do I cancel insurance when a case is handed
over to an IP?
Yes. Where a case is handed over to an insolvency practitioner the details of all
insurance cover put in place by the official receiver should be included in the trustee
or liquidator’s record book. The insolvency practitioner should also be given details
of any premium paid. Any cover in place with Aon should be cancelled shortly after
handing over the estate, usually after 5 working days have elapsed, to allow the
insolvency practitioner to arrange any replacement insurance.
How do I insure overseas?
Aon can provide insurance for properties overseas, although it will be off-scheme,
meaning that it not administered in the same manner as more common insurance,
such as buildings insurance.
What is the code of practice for insuring
unoccupied premises?
Aon has issued a Code of Practice for insuring unoccupied buildings, available in the
process guidance referred to above. This code should be followed whenever an
insured building is unoccupied. The requirements are somewhat exacting and might
be considered onerous in certain circumstances – in which case a disclaimer of the
property might be more appropriate.
What do I do if I need to make an insurance
claim?
If it is necessary to make a claim the official receiver should deal directly with Aon.
Introduction
14.1 General
This chapter deals with the obtaining or maintaining of the insurance cover required
protecting assets held in insolvent estates. Guidance on dealing with insurance that
is, of itself, an asset (such as life cover), can be found in chapter 33.
14.2 Necessity for insurance cover
Where the official receiver is provisional liquidator, liquidator, interim receiver, or
trustee, they have a duty to protect the assets of the insolvent. Where the assets
cannot be disposed of or realised quickly, the official receiver will have to consider
whether insurance against loss or destruction of an asset or any risk of damage to a
third party or their property is necessary, and take into account how much this will
cost against the potential value of the asset.
14.3 Official receiver’s duty of care not
discharged by the obtaining of insurance
When the official receiver becomes responsible for the insolvent’s property (which
includes unoccupied premises or other assets, e.g. motor vehicles), their duty of care
is not discharged merely by insuring the property. Insurance only provides an
indemnity against monetary liability.
14.4 Action to be taken to deal with duty of
care
Where necessary, the official receiver should attempt to limit the risks of injury to
third parties as soon as possible, for example by either improving the security of the
premises or by arranging for the removal of the assets. The Aon “Code of Practice
on Unoccupied Premises” (see Annex A) should be followed in all cases where
insurance cover is taken with them and provides good advice on how to deal with
any unoccupied buildings. Chapter 11 also provides guidance in this area.
14.5 Process to obtain insurance
The Insolvency Service has a contract with Aon Insurance to provide insurance for
risks associated with insolvent estates and, unless the insolvent already has suitable
insurance in place, cover should be obtained only from Aon, where necessary.
14.6 Using an insurer other than Aon
The official receiver should only use another insurer where they are continuing cover
with the insolvent’s existing insurer or where Aon are unable to provide the
necessary cover. This is only likely in exceptional circumstances and before seeking
cover from an alternative source, the official receiver should consider the cost of the
premium in relation to the value of the asset they are trying to protect.
14.7 Expense of insurance cover
Any insurance premium charged in respect of an insolvent’s property is an expense
charged to the estate account.
14.8 Meeting insurance premiums
The official receiver must meet premiums in all cases. A debit balance may be
incurred or increased to pay any necessary insurance premium without specific
authority unless the premium is estimated to be over £2,500, in which case the
authority of the Senior Official Receiver’s office should be sought (see chapter 1). In
all cases the incurring of insurance premiums should be managed carefully and
ideally not incurred where there is unlikely to be a commensurate benefit to the
estate, as outlined above.
14.9 Cancel insurance when no longer
required
Whilst property should be insured to protect assets and prevent loss through events
such as fire and water damage, theft or public injury, the official receiver and LTADT
should ensure insolvents’ estates are regularly reviewed, to check whether insurance
premiums incurred for estate assets are still sufficient or required and promptly
cancel the insurance where no longer required.
Deciding whether to insure
14.10 Factors to consider when deciding
necessity for cover
The decision on whether or not to insure will depend on the facts of the case and is
at the official receiver’s discretion. Whilst it is generally better to insure than not
insure, the official receiver should examine carefully the circumstances of each case,
taking into consideration the potential value of the asset concerned, the likelihood of
public liability and the existence and validity of insurance already taken out by the
insolvent. The following questions should be considered when making the decision
on whether or not insurance is necessary.
a) Does the property comprise part of the insolvent’s estate (or is it in fact property
belonging to a third party)? The official receiver should not insure the following at the
expense of the estate, other than in exceptional circumstances:
• third party property
• fully charged property
• some leasehold property
b) Is insurance already in place? - Where the insolvent has insurance cover in place
the official receiver should follow the guidance in paragraph 14.35 of this chapter.
c) What is the potential loss to the estate and/or personal liability likely to be incurred
where the official receiver does not take out insurance? Where the official receiver
becomes liquidator or trustee there may be a potential liability if they fail to insure
property which is subsequently lost or damaged, the insurance of which would have
been reasonably expected to be effected by any prudent liquidator or trustee.
Against that, the costs of insurance should be weighed against the potential loss to
the estate if an asset is lost which may not have any material value.
14.11 Disclaim if costs relating to property
(including insurance) outweigh benefits
If the cost of insurance and other obligations (such as security, environmental hazard
precautions and in particular, the insurance requirements around unoccupied
premises) are likely to exceed the net benefit to the estate, the official receiver
should ensure that any premises or relevant assets are disclaimed as a matter of
urgency as soon as it is possible to do so (see chapter 42 - Disclaimers). The
insurance cover must not be extended beyond the date of disclaimer, and the official
receiver should take active steps to cancel insurance where an asset has been
disposed of or disclaimed.
14.12 Official receiver’s liability as an occupier
of land or premises
In addition to the insurance of property, the official receiver will need to consider
whether insurance is required to cover any liabilities arising from potential negligence
on their part or as the occupier of premises.
14.13 Obtaining cover where value of property
uncertain
There will be times when, especially in respect of mortgaged land and buildings, the
official receiver will be unable to establish whether the asset has any realisable value
to the estate of the company or the bankrupt. In suitable cases if uncertain, the
official receiver should effect cover, such as public liability insurance, which should
be obtained pending further enquiries and discussions with the mortgagee or
chargee who might be expected to have the priority interest in insuring the property.
14.14 Third party goods
The official receiver when acting as liquidator or trustee does not have a statutory
duty under the Act to protect third party property. The official receiver should not
normally incur expenditure on insuring third party property except to protect
themselves from any public liability.
See chapter 25 for guidance on dealing with third party property.
14.15 Decision to insure third-party goods
Where the official receiver has to insure third party goods or wishes to obtain
insurance cover against potential claims that they have failed to exercise adequate
care as an involuntary and/or gratuitous bailee of third party goods, such insurance
may be obtained under the Aon Open Cover facility, but it must be made clear to
Aon the exact ownership of the goods. Where the insurance may result in a high
premium or will require a payment of more than £2,500, the guidance in chapter 1
regarding the requirement to obtain the permission of the Senior Official Receiver
should be followed before committing to any expenditure.
14.16 Property subject to a charge
Where an insolvent’s property is subject to charge(s) and it is unlikely that there will
be any benefit from the property for the unsecured creditors, it will usually be
appropriate for the mortgagee to arrange insurance although consideration should
be given to public liability insurance where the official receiver is not indemnified by
the mortgagee. The official receiver should notify the mortgagee of the making of the
winding-up order or bankruptcy order, as soon as possible, and inform the
mortgagee that they do not intend to arrange insurance of the property; it will then be
for the mortgagee to insure its interest (if it has not already done so).
If the charged property may produce a surplus for the benefit of the estate, the
official receiver should contact the mortgagee to confirm that the property is
adequately insured and that the official receiver’s interest is noted. Where a
mortgagee is in possession of the premises it will normally be responsible for any
public liability insurance. However, if the official receiver considers that there is any
residual occupation by the insolvent, or if they are concerned about particular risks
inherent in the property, they should ensure that public liability insurance is effected.
The official receiver should not normally insure fully charged assets. Where the
official receiver considers it is necessary to effect insurance cover, this cover should
be effected on a short term basis pending disclaimer of the asset or the other
interested persons agreeing to be responsible for the insurance.
14.17 Leasehold property
Where the insolvent has leasehold property, the official receiver should examine the
lease document to determine whether it is a condition of the lease that the insolvent
should insure the property, or whether this is the responsibility of the landlord. Where
the insolvent is required to insure the property the official receiver will need to decide
whether the lease has any value to justify insuring the property.
Where leasehold property is of no value to the estate and the lease contains
covenants to insure, the official receiver as liquidator or trustee should disclaim the
lease, but they should also inform any person affected by the lack of insurance of
their liability to arrange/continue insurance cover.
14.18 Receiver or administrative receiver in
office
If a receiver or administrative receiver is in office when the winding-up order is made,
the official receiver should only insure any assets which come under their control,
that is those assets not covered by the fixed or floating charge(s). The official
receiver should also effect cover for third party liability.
14.19 Case handed over to an insolvency
practitioner
Where a case is handed over to an insolvency practitioner, the details of all
insurance cover effected by the official receiver should be included in the trustee or
liquidator’s record book1. Any cover effected should be cancelled shortly after
handing over the estate, usually after five working days have elapsed, to allow the
insolvency practitioner to arrange any replacement insurance. The official receiver
will have to pay any premium in respect of insurance effected by themselves and any
resultant debit balance transferred to the insolvency practitioner.
1. IPROH
Cover to be obtained
14.20 Recommended minimum insurance
requirements
The following paragraphs outline the recommended minimum insurance
requirements available under the Aon Insolvency Open Cover Insurance Facility (see
below) and it is recommended that this level of cover is also the minimum
requirement if the official receiver decides to continue the insolvent’s existing
insurance.
Each case must be looked at on its merits and where there are unusual risks e.g.
petrol stations and building sites or particularly valuable assets e.g. artwork or
precious stones, advice should be sought from the insolvent’s existing insurers or
Aon as to how those risks should be covered.
14.21 Sum to be insured
Where insurance is effected it is important that the sum insured is adequate to cover
the potential losses. Any underinsurance will reduce the amount that will be paid in
any claim in proportion to the amount by which the asset/risk is underinsured.
Buildings and other physical assets should be insured on a “reinstatement” basis.
This means insuring a building for the cost of rebuilding or repair, or the replacement
or repair of any other asset as new (without deduction for wear and tear).
14.22 Under-insurance and insurance
averaging clauses
When considering insurance and the cost of insurance official receivers should be
aware that it is standard practice in the insurance industry to apply an averaging
clause where the risk to an asset has not been insured to its full re-instatement
value, leaving the asset under-insured. This means that insurers are entitled to
reduce any claim payments by scaling the payment downwards, in direct proportion
to the under-insurance. The insurer is entitled to make this reduction as the policy
holder has paid a lesser premium on the item where it is under insured.
An example of how insurance averaging clauses work is as follows:
• a property is insured for a rebuild value of £175,000, but the true cost at the date of
the claim for the rebuild value is £200,000
• the property becomes flood damaged and a claim is submitted for £20,000
• as the property is only insured for a rebuild value of £175,000 the effect of the
averaging principle is that the £20,000 claim is scaled down by the insurer to a
payout of £17,500
In the same way, if the liquidator or trustee insures only their beneficial or equitable
interest in a property, rather than the total value of the property, insurance averaging
will reduce the value of any claim, relevant to the amount insured.
An example to show the effect of insurance averaging where the liquidator/trustee
has insured only their beneficial or equitable interest is as follows:
• the liquidator/trustee insures their beneficial interest of £20,000 equity in a property
valued at £200,000. As a result of averaging being applied, an insurance payout
might only recover as little as £2,000
This illustrates that an insurance policy, which allows the liquidator/trustee to insure
only the beneficial interest in a property, needs to exclude any averaging clause, to
prevent a substantial reduction in the amount of any claim paid out.
14.23 Insurance cover provided by Aon and
averaging clauses
Aon has confirmed that there is no averaging clause on the household policies it
supplies. Inflation cover up to 125% is also included to prevent the property being
under-insured.
Averaging does apply where Aon is instructed to insure a property where there is
commercial use, e.g. a block of flats or a buy-to-let property where there is more
than one separate rentable space. Aon automatically allows a 15% “buffer” or margin
to account for cases of underinsurance, before applying its averaging clause. This is
to allow for the fact that it can be difficult to accurately assess the exact amount
required to adequately insure a property in the event of its needing to be
substantially repaired or rebuilt at some unknown point in the future.
14.24 Public Liability Insurance
Public liability insurance is cover for claims resulting from accidental damage caused
to a third party by property in the official receiver’s custody or control. An example of
this would be a tile falling from the roof of a building owned by the insolvent and
injuring a passer by. This cover should be obtained whenever insuring any buildings
belonging to the insolvent except the residential home of a bankrupt. The Aon
buildings cover for residential properties includes public liability insurance.
14.25 Motor vehicles
Motor vehicle insurance is a statutory requirement1 that extends to any vehicle using
the public highway. Aon provides a Certificate of Motor Insurance to each official
receiver’s office on an annual basis. This provides blanket comprehensive coverage
in respect of any motor vehicle in the official receivers’ custody or control or that of
any company or firm of which the official receiver is the office holder. The insurance
covers any authorised licensed driver using the vehicle for the business of the
insured. This insurance is only activated when the official receiver has advised Aon
of the details of the vehicle and the need for the insurance.
The official receiver should send to Aon details (make, model and registration
number, along with an indication whether it is being used) of any vehicles to be
insured within seven days of their appointment as office holder. This will allow Aon
to fulfil the legal requirement to advise the insurer who can, in turn, update the Motor
Insurance Database.
1. Road Traffic Act 1988 section 143
14.26 Employers’ liability
Employers’ liability insurance is a legal requirement if you have employees including
part-time casual staff1. Aon provides blanket coverage for all cases where there are
employees and provides every office with a Certificate of Employer Liability on an
annual basis.
This insurance will primarily only be required in relation to trading appointments.
1. Employers’ Liability (compulsory Insurance) Act 1969
14.27 FCA publication requirement for
Employers’ Liability Policies
The Financial Conduct Authority (FCA) Regulations requires all insurers to publish all
current Employers’ Liability Policies on a website in a searchable format. This is to
assist in identifying relevant insurers where claimants who have suffered injury or
disease in the workplace wish to claim against the insurance held by their employer
or former employer.
All insurers are required to publish this information either on their own website or to
become a member of a tracing office, such as the Employers Liability Tracing Office
(ELTO).
The information is stored by ELTO on a central database called the Employers’
Liability Database (ELD). This will be available on the ELTO website for claimants to
trace Employers’ Liability Policies for both current and historical employers.
In order to uniquely identify each employer, the Employers’ Reference Number
(ERN) (more commonly referred to as the Employer PAYE reference number) will be
used as to assist claimants in tracing Employers’ Liability insurance details.
14.28 Information required by Aon where
employers’ liability insurance is required
On all appointments under the Aon Open Cover Scheme where Employers’ Liability
insurance is required, Aon requires the following information to be provided:
a) ERN/Employer PAYE Number (including any known changes)
b) Full names of all the policyholder’s subsidiary companies
c) Notice of all changes to the ERN/PAYE reference during the official receiver’s
appointment whilst Employers’ Liability insurance is required under Aon’ Open Cover
Scheme.
14.29 Terrorism
Cover for acts of terrorism is subject to strict rules, must be specifically requested
and cannot be backdated.
Where the location or type of assets suggest a particular risk, e.g. a city centre
department store, or the insolvent had such cover under a policy that had recently
lapsed, the official receiver should ask Aon the terms (if any) under which full cover
against acts of terrorism might be granted. If the additional premium is significant
(i.e. £2,500 more than standard cover) the cover should only be extended with the
agreement of major creditors.
Payment of the premium for any cover against acts of terrorism must be made within
21 days of the cover being arranged.
14.30 Assets held at official receivers’ offices
On the rare occasions that it is considered necessary to store an insolvent’s assets
at the official receiver’s office, adequate insurance cover must be obtained. This will
be available on a case by case basis with Aon provided that they are specifically
informed of the risk. Adequate security of the asset(s) must also be arranged. The
official receiver may consider storage of a computer at their premises when access
to the insolvent’s records on a computer is required. The asset(s) should be stored at
the official receiver’s office for the minimum period possible and Aon must
immediately be advised of any changes in circumstances and when cover is no
longer required.
14.31 Goods in transit or in control of agents
The official receiver should generally rely upon (and hence will need to have details
of) the insurance cover of agents where they are removing an insolvent’s assets. If
the official receiver is concerned as to the availability/adequacy of insurance
arrangements to cover the transporting of an insolvent’s assets, they should discuss
the matter with the agents. Aon can provide insurance cover for goods in transit if
required.
With regard to assets being held by the official receiver’s agent(s), depending on the
terms of the agents’ contract with the official receiver, these will normally be covered
under the agents’ insurance cover. Aon has confirmed that, where the official
receiver’s contract with their agent shows the official receiver maintains the
requirement to insure the assets, there should be no issue in paying out in the event
of a claim under the Aon Insolvency Open Cover Facility.
Stay of proceedings, annulments and
post-bankruptcy IVAs
14.32 Stay of proceedings
Where insurance has been effected prior to a stay of proceedings, it should be left in
force. The official receiver should exercise care in effecting insurance during the
period when a stay is in force. During the period the stay remains in force, it would
appear there is no power/duty for the official receiver to insure the insolvent’s
property. If the official receiver is aware that there is no cover in force, or existing
cover will expire during the period that the stay is in force, it would be wise for them
to notify the directors/bankrupt that the property is uninsured, so that this can be
addressed.
Alternatively, the official receiver should agree with the directors/bankrupt the terms
of the insurance or the official receiver may seek directions from the court1. The
official receiver may also seek the directions of the court concerning the insurance
and protection of assets where the insurance will expire whilst a stay is in place or
the court has granted a general “stay of advert” requiring the official receiver to do
nothing to further publicise the insolvency order.
1. Rule 13.4
14.33 Annulments
When a bankruptcy order is annulled, the official receiver should arrange to cancel
the insurance cover from the date of the annulment and inform the bankrupt of the
position. Enquiries should be made of the insurance company in advance of any
hearing to establish the amount owed and the exact date that insurance cover will
expire. Premiums paid or cancellation charges incurred should be recovered as part
of the official receiver’s costs and expenses claimed at the annulment hearing. The
official receiver should also arrange to return any keys to the former bankrupt as
soon as possible, in order to avoid any liability for the loss of the former bankrupt’s
property.
In annulment cases the cost of insurance up to the date of the hearing should be
requested from Aon and included in the costs of the annulment.
14.34 Individual voluntary arrangements-
cancelling insurance
Where an individual voluntary arrangement (IVA) is entered into following the making
of a bankruptcy order, any asset(s) included within the IVA cease to be assets
comprised in the insolvency estate. As a result the official receiver should ensure
that insurance provision relating to those assets is cancelled, as soon as practically
possible after the IVA is agreed. No further premiums should be incurred in relation
to these assets after the approval of the IVA.
Any assets remaining under the control of the official receiver but not included in the
IVA should continue to be insured as necessary pending the annulment of the
bankruptcy order or other court order as to their disposal.
Insurance cover already in place by
insolvent
14.35 Action required where existing cover in
place
Where the insolvent has any type of insurance cover in force at the date of the
winding-up or bankruptcy order, the official receiver should not assume that this
insurance will continue. The official receiver should:
• obtain details of the insurance companies concerned
• obtain the policy number(s)
• establish the position regarding the payment of the premium(s)
• establish the expiry date(s) of such cover
• check that the cover arranged by the insolvent is adequate, taking into account the
guidance elsewhere in this chapter
• check whether the insurance is affected or even invalidated by the event of
insolvency
In addition, and to support the enquiries outlined above, the official receiver should
ensure that all policy documents are recovered as soon as possible.
14.36 Continuance of cover
The official receiver should exercise discretion as to whether to effect new short term
insurance under the Aon Insolvency Open Cover Facility or to continue to allow the
existing cover. Where the official receiver is satisfied that adequate cover is provided
under the existing policy, they should contact the insolvent’s insurers without delay to
inform them of their interest in the relevant policies.
Written confirmation of the cover still required should be sent to the insurance
company and the relevant current policies should be sent for endorsement of the
official receiver’s interest in them. Where an insurance policy is endorsed in the
official receiver’s favour, to avoid the risk of liability being repudiated on the grounds
of, for example, inadequate disclosure in the original proposal, the official receiver
should seek to obtain an endorsement in the form outlined in the following
paragraph.
14.37 Endorsement to be used where official
receiver continues the insolvent’s insurance
This insurance so far as the interest of the Official Receiver as (provisional
liquidator/liquidator/interim receiver/trustee) is concerned shall not be prejudiced by
any act, omission or neglect on the part of the insured in completing the original
proposal forms, or by any alteration, whereby the risk of destruction or damage has
increased after the date of the (appointment of a provisional liquidator/interim
receiver/winding up order/bankruptcy order) in relation to the insured’s property
without the knowledge of the Official Receiver as (provisional
liquidator/liquidator/interim receiver/trustee) provided that the Official Receiver as
(provisional liquidator/liquidator/interim receiver/trustee) shall, immediately on
becoming aware of any such matter as is mentioned above, give notice in writing to
the Insurance Company and on demand may pay such additional premium as the
Insurance Company may require.
14.38 Cancellation of existing cover
If the official receiver considers it is preferable to terminate cover previously effected
by the insolvent, they should notify the insurance company in writing at the earliest
opportunity that cover is no longer required so that a refund of the premium can be
obtained. Policy number(s) should be quoted whenever they are available.
If there are outstanding claims or the possibility of a claim on the existing insurance it
may be prudent to leave the policy in force until these are resolved.
Aon Insurance cover
14.39 Details of the Aon Insolvency Open
Cover Insurance facility
The Insolvency Service uses the Insolvency Open Cover Insurance facility operated
by Aon Limited. This scheme provides official receivers with automatic insurance
cover when dealing with insolvents’ estates. The scheme is designed to
automatically cover most insurance risks anywhere within the United Kingdom.
When in doubt as to whether a risk is insured contact should be made with the Aon
client services manager.
This section of the Technical Manual gives an overview of the scheme; detailed
guidance is available on the intranet.
14.40 Risks outside the scope of the Open
Cover facility
There are some classes of insurance risk which remain outside the scope of the
automatic facility due to the nature of the risk or the infrequent need for cover. Where
insurance cover is required on risks not covered by the automatic facility, this must
be placed separately by Aon in the open insurance market and all relevant
underwriting information must be immediately supplied to Aon.
“Off Scheme” insurance is also required for property held overseas.
14.41 Notifying Aon within agreed timescales
of the insurance requirement
The official receiver must inform Aon if insurance is required as soon as possible
after their appointment. Where automatic cover for a smaller non-trading case is
required, the scheme allows a period of 30 days in which a notification can be made.
This period of 30 days is used for administrative convenience and the official
receiver should not delay notifying Aon just because this period is available. Where
certain trades and activities are concerned, notification to insurers is required within
14 days.
14.42 Where there is doubt if automatic cover
is available
If there are any doubts as to whether or not automatic cover is available, the official
receiver should contact Aon as soon as possible. Aon staff will be able to advise
what cover may be required when they are told the trade of the business over which
the official receiver has been appointed.
14.43 Small non-trading cases
For all cases with no special insurance risks (small non-trading cases) cover may be
obtained through the standard process included in the intranet guidance.
Insurance should be effected as soon as the official receiver becomes aware of an
asset requiring insurance cover. Cover will be provided from the date of the official
receiver’s appointment on the appropriate cases, as long as notification is provided
within 30 days of the official receiver’s appointment.
14.44 Assets identified 30 days or more after
the official receiver’s appointment
Where assets requiring insurance come to light more than 30 days after the date of
the official receiver’s appointment, these can be insured by Aon but the cover will
only be effective from the date Aon is notified of the assets.
14.45 Cancellation of automatic insurance
cover
Insurance cover (and the liability to pay the premiums) continues until the official
receiver instructs Aon that the cover is no longer required. Aon never automatically
cancels insurance and only invoices for insurance premiums once the cover has
been cancelled.
The official receiver’s automatic insurance cover must be cancelled where:
• the asset is disposed of
• in relation to a property, a charge is obtained by the official receiver
• a property is repossessed under the terms of a mortgage charge or an LPA receiver
is appointed
• a disclaimer is issued
• the order is rescinded or annulled
• an insolvency practitioner is appointed
• the official receiver’s interest in the asset, as liquidator or trustee has otherwise
ended
The insurance should be cancelled within five working days of the insurance being
deemed unnecessary. The date of cancellation should be the date that the insurance
became unnecessary (the date of the annulment, for example) and not the date of
notification. It is important the correct date is used to ensure that the estate is not
charged for periods when the insurance was no longer required.
In any case, the need for continued insurance must be regularly reviewed, and the
insurance cancelled within five working days once it has been decided it is no longer
required.
The cancellation of insurance should be noted on the case file in an appropriate
place.
14.46 Classes of risk outside of the automatic
insurance cover
The Aon Insolvency Open Cover scheme is designed to automatically cover most
insurance risks. However, there are other classes of insurance risk which remain
outside the scope of the automatic facility due to the nature of the risk or the
infrequent need for cover. These risks, when insurance cover is required, must be
placed separately by Aon in the open insurance market, and all relevant underwriting
information must be immediately supplied so that Aon may approach underwriters.
Details of trades and activities which are excluded are included in the intranet
guidance
14.47 Cases where insurance cover required
exceeds small non-trading case criteria
For larger cases the official receiver will need to contact Aon by telephone to obtain
suitable insurance cover. The cover needed may require Aon to place the insurance
separately in the open insurance market and all relevant information should be
supplied to Aon by the official receiver. Some examples provided by Aon of
businesses where insurance will need to be obtained separately on the open market
include art dealers, jewellers’ shops, racehorses and fish farms. The amount of the
insurance premium should be agreed between Aon and the official receiver.
Once agreement has been reached with Aon the official receiver should complete
the appropriate “Aon Data Gathering Form” and return it to Aon. The relevant form
will be emailed by Aon following discussion with the official receiver as to the
unusual insurance required. Aon staff can give assistance in the completion of the
questionnaire and may also arrange a site visit to confirm the insurance is adequate
or give advice on security.
14.48 Insurance for solely owned tenanted
properties
Where insurance is either not in place on a tenanted property or that insurance is
inadequate (e.g. landlord’s insurance including public liability and building
insurance), this needs to be dealt with immediately. Providing the property is in use
for residential purposes and is within the designated limits, most cases can be
covered following the standard process. Where a case does not fall into these
criteria it will be necessary to contact Aon to agree individual insurance cover,
generally this will be where a property is rented out to a business for commercial
purposes.
14.49 Process for requesting insurance for
overseas properties
The Aon Insolvency Open Cover facility insurance scheme does not cover overseas
properties, although Aon can provide insurance for properties overseas “off scheme”.
Aon is able to place official receivers’ requests for insurance on an ‘open market’
basis with the scheme insurers, and this applies when dealing with cases where the
asset is property outside of the UK (overseas). The fundamental differences between
open market placements and the standard Aon scheme arrangements are:
a) Cover is not automatic.
b) Premiums are payable upon invoice.
With regard to (b) this can be particularly important where there is an overseas
business, as taxes may be payable in the overseas territory for which an insurer is
liable with immediate effect from the date of cover commencing. Failure to make the
immediate payment of the premium when invoiced may result in cancellation of the
cover by the relevant insurer.
14.50 Payment of premiums
Aon invoices for insurance premiums only when the relevant insurance cover has
been cancelled (this should be within five working days of it no longer being
required). Aon will invoice the originating official receiver who should forward all
authorised invoices to EAS for payment.
Making a claim under the Aon scheme
14.51 Notification of claims
It is a condition of insurance policies that claims or potential claims are notified as
soon as practicable. Therefore the official receiver should telephone Aon with
preliminary details as soon as possible after the loss has occurred and immediately if
circumstances warrant, e.g. loss of life or major property damage. In an emergency,
outside office hours Aon personnel can be contacted at home (see the Aon Facility
Guide available on the intranet).
14.52 Notification to other third parties and
minimising further losses
Where the claim relates to theft, malicious damage, riot or other criminal activity the
official receiver should also inform the police. In all cases steps should be taken to
minimise any potential further losses and an estimate for replacement or repair
obtained.
14.53 Appointment of a loss adjuster and
attendance on site
When Aon are notified of a claim they will appoint a loss adjuster, if required, who
may visit the site of the claim to ensure the official receiver’s best interests are
protected. In straightforward claims Aon aims to settle the claim within 20 working
days.
14.54 Public liability and motor vehicle claims
In respect of public liability claims and those relating to motor vehicles the official
receiver should make no admission of liability and all third party correspondence in
relation to the claim must be forwarded to Aon unanswered, who will undertake to
ensure that the relevant insurer takes control of the conduct of the claim and will deal
directly with third parties or their representatives. Any writ or summons in connection
with the claim should be forwarded to Aon immediately.