Can I get Insurance when I have had a previously insolvent business?

So you had a viable business; unforeseen circumstances meant you had no option but to bring in receivers.

Once the business is heading toward insolvency, there is probably no way back; you have been advised the best and only way forward is to bring in Receivers and let things take their course; potentially excellent and realistic advice on one hand but from a future perspective, not so much.

Obtaining Insurance for previously insolvent businesses can be a challenge, but with the right approach and our sympathetic panel of insurers, help could very well be at hand.

The receivers are in, but it wasn’t our fault.

This happens all too often; your customers have themselves ceased trading mid-contract, cancelled contracts and the pandemic didn’t help either. Whilst the bounce-back loans were available, receiving them was one thing, but when the time came to start paying them back, things could have gone better.

We do understand that, for many, it wasn’t your fault.

Can I get Insurance following my previous business receivership?

There is life after insolvency practitioners and receivers have pulled apart what’s left of your business. Liquidations, insolvencies, bankruptcy, and that whiff of the receivers don’t sit well with insurance companies; they are generally not overly receptive to offering terms on your new start-up business, essentially what is termed a phoenix business. Even the government has a take on these

Many insurers are sympathetic to previous business failures though subject to a good story as to the reason why, but it really does depend on that all-important back-story; let’s get one thing out of the way though, habitual phoenix businesses can be challenging; who the creditors are can also determine whether an insurer will offer terms, large debts to HMRC being a typical example.

My business had CCJs and a CVA before the doors closed.

Sometimes life can be even more difficult for previous directors; before the insolvency, there were signs of things not looking too well. Trying to rescue the business was a good idea at the time, but that may only have created personal problems such as County Court Judgements (CCJ’s), both to the business and personal ones too.

Suppose there has been a history of previous Company Voluntary Arrangements (CVAs) or Individual Voluntary Arrangements (IVAs). In that case, these are all potential significant bumps in the road.

Let’s put the positives together; start by speaking with us about how we can get Insurance for your new business.

Can I trade without Insurance?

This is a complex question; you could, we wouldn’t recommend it and it could be construed as a rather foolish thing to do. Depending on what your business involves; if you have employees, then it’s a statutory requirement to have Employer’s Liability Insurance in place. Similarly, if you use a vehicle within your business, Motor Insurance is a legal requirement too.

After this, it’s entirely up to the individual whether they take the risk of not having business insurance coverage in place. Obviously, we would advise people to ensure that protection is in place.

Directors have personal CCJs and IVAs. Does that affect anything?

Just like disclosing business history, it’s essential that the financial history of Directors, as well as partners and sole traders, is disclosed to the insurers.

What happens if I don’t disclose my business history?

It doesn’t matter what your history is or if you have been in the same position before, it’s essential that you disclose everything to a prospective insurer. When you apply for Insurance, you must do so based on “fair presentation”.

Fair Presentation in this case means amongst other questions you must obtain the full details of any insolvencies, bankruptcies, liquidations or details of any receivership from any other significant people in the business. You are disclosing your history as a collective, not just the person applying for the Insurance. There will of course be many other questions relating to your new business, its important that you provide as much information as possible, and be truthful as well.

If you try to hide previous history, if you or your new business have a claim in the future, it won’t take long for the new insurer to find out that there is a prior history of insolvencies, bankruptcies, receiverships as well as any other financial irregularities. This constitutes a non-disclosure which would likely mean that your insurer would decline any claim, leaving you to pick up the costs yourself.

Is Insurance for previously insolvent businesses expensive?

Unfortunately, this is a difficult question to answer; it can depend on the previous business history; of course, with a much lower number of insurers available, you will likely pay higher premiums for your new business insurance than you did previously.

Can I protect myself again as a company director?

As a company director, you are exposed to all manner of risks; there are unfortunately risks which you could be held personally responsible. There isn’t any commonly available insurance that will pay all the company’s debts if you cannot meet them.

A Directors & Officers Liability insurance or Management Risks Insurance could help by providing a defense for a wrongful act whilst carrying out your duties in the business; you could have been part of the problem that the company became insolvent.

Could a shareholder take action against you as a director? Did you give preferential payment terms to favorite suppliers you knew you would use for future business? If the suppliers you didn’t pay find out, they could take action against you personally for a wrongful act.

Having directors & Officers’ Liability in place can personally protect you and other directors

Why not speak to us at Real Insurance Group; we are specialists in finding insurance coverage for the more difficult-to-place Insurance. Getting Insurance for previously insolvent businesses can be a challenge; let us help you get that all-important new business protection.