Insurance After a CVL: Cover for Directors' Next Company
Yes, you can insure a new business after a creditors' voluntary liquidation (CVL), but you must disclose it. Most commercial proposal forms ask whether any director has been involved with a company that went into liquidation, administration or receivership, usually within the last five or ten years. A CVL is a yes to that question. Mainstream insurers and online quote engines often decline automatically once that box is ticked. Specialist insurers, Lloyd's syndicates and MGAs will still offer cover. They want to know why the old company failed, whether the directors' conduct report raised anything, and what is different now. Put the CVL in front of an underwriter with that explanation and the evidence behind it, and the new business can usually be insured on sensible terms. Hide it, and any claim on the new policy is at risk.
Key facts at a glance
- A CVL is a material fact. Under the Insurance Act 2015 you must disclose it whenever it would influence an insurer, whether or not the form asks.
- Look-back periods vary. Most insurers ask about the last five years, some ten, and some ask about any director ever involved.
- The old policies end with the old company. Once the liquidator is appointed, the directors no longer control the company's insurance.
- The new company starts with no history of its own. Insurers rate it on the directors' history instead, so the CVL travels with you.
- The conduct report matters. The liquidator reports on every director's conduct to the Insolvency Service within three months of appointment.
- Specialist markets exist for this. We place post-CVL risks through Lloyd's and specialist MGAs that read the file rather than the tick box.
A creditors' voluntary liquidation is the most common way a limited company in the UK closes when it can't pay its debts. It often follows a winding-up petition or a period in administration. The directors decide the company is insolvent, the shareholders pass a resolution to wind it up, and a licensed insolvency practitioner is appointed as liquidator. For most directors, though, the CVL is not the end of their working life. They start again: a new limited company in the same trade, a sole-trader business, or a directorship somewhere else.
That is where insurance becomes the problem nobody warned them about. The new company needs public liability, employers' liability, property cover and often professional indemnity before it can trade, sign contracts or hire staff. Yet the first online quote engine they try asks one question about previous insolvency and stops. This guide explains why, what insurers actually need to see, and how to get the new business properly insured.
In this guide
- What happens to insurance in a CVL
- Do you have to disclose a CVL?
- Why insurers treat a CVL differently
- The proposal form questions
- The Insurability Framework
- Cover the new company needs
- Directors' and officers' cover
- Claims against the old company
- Reusing the old company name
- What drives the cost
- Illustrative case studies
- How to get insured, step by step
- Glossary
- Frequently asked questions
What happens to your business insurance when a company enters a CVL?
When the liquidator is appointed, the directors' powers stop and control of the company's assets, contracts and insurance passes to the liquidator. Existing policies may run on, be cancelled for a return premium, or be replaced by the liquidator's own cover for assets awaiting sale. None of the old company's policies move across to a new business.
In practice, the liquidator's first job is to protect what is left for creditors. Stock, vehicles, plant and premises still need insuring until they are sold, so insolvency practitioners usually arrange cover through their own facilities and cancel what is no longer needed. Employers' liability falls away once the staff are dismissed. Any return premium on cancelled annual policies goes into the pot for creditors, not back to the directors.
For you as a director, the point is simple. The insurance that protected the old company belongs to the liquidation. The new business starts from nothing and has to be insured in its own right, from its first day of trading.
Do you have to tell a new insurer about a previous CVL?
Yes. A director's involvement in a company that went into liquidation is a material circumstance, so it must be disclosed when the insurer asks and whenever it would influence their decision. Under the Insurance Act 2015, getting this wrong can lead to a claim being reduced or refused, or the policy being treated as if it never existed.
The Insurance Act 2015 places a duty of fair presentation on every business buying insurance. You must disclose every material circumstance you know or ought to know, or give the insurer enough information to prompt them to ask. A previous insolvent liquidation sits squarely inside that duty. Insurers treat it as a direct signal about the people running the new business.
The remedies are proportionate. If a non-disclosure was deliberate or reckless, the insurer can avoid the policy entirely and keep the premium. If it was careless, the outcome depends on what the insurer would have done had it known: refused the risk, charged more, or added an exclusion. Each of those can turn a valid claim into a partial payment or none at all. Our guide to policies voided for non-disclosure covers this in more detail.
Why do insurers treat a CVL differently from a solvent closure?
A CVL means creditors lost money, and insurers want to know whether the reasons could repeat. A solvent closure, such as a members' voluntary liquidation, pays everyone in full and raises few questions. A CVL prompts questions about cash flow, risk management and decision-making, because those same directors now run the business being insured.
Underwriters are not judging you for having a company fail. Plenty of well-run businesses go under because a major customer collapsed, energy costs spiked, or a single contract went wrong. What an underwriter is trying to work out is whether the factors behind the failure create a higher chance of claims in the new venture. Typical concerns are:
- Maintenance and housekeeping. Businesses under financial pressure cut back on maintenance, training and risk control, which drives property and liability claims.
- Moral hazard. In rare cases, a struggling business sees a fire or theft as a way out. Underwriters screen for this on any risk with a recent insolvency.
- Unpaid premiums and broken relationships. Insurers who were creditors of the old company may refuse to deal with the same directors again.
- Same trade, same risks. If the new company does exactly what the old one did, the underwriter needs to see what has changed.
Which questions on a proposal form catch a CVL?
Look for questions about insolvency, liquidation, administration, receivership, bankruptcy and voluntary arrangements. They usually apply to the business and to every director, partner or principal, past and present. A CVL means answering yes to the liquidation question, even when the new company has never been insolvent itself.
Wording varies between insurers, which is where many directors trip up. Here is how the common versions apply after a CVL.
| Typical question | Does a CVL count? | What to provide |
|---|---|---|
| Has the business or any director ever been declared bankrupt or insolvent? | Yes. The old company was insolvent and you were a director. | Company name, date of the CVL, your role. |
| Has any director been a director of a company that went into liquidation, administration or receivership in the last 5 years? | Yes, if the CVL falls inside the period. | Liquidator's name, cause of failure, creditor position. |
| Has any director been disqualified from acting as a director? | Only if a disqualification followed. The CVL alone doesn't count. See insurance after director disqualification. | Answer accurately, and disclose any undertaking or pending proceedings. |
| Are you aware of any circumstances that may affect this proposal? | Yes. This is the catch-all question. | A short written summary of the CVL. |
| Has any insurer declined, cancelled or imposed special terms? | Possibly, if the old company's cover was cancelled or not renewed. | Details of any cancellation linked to the insolvency. |
If a form asks nothing about insolvency at all, that doesn't end the duty. The catch-all question and the fair presentation rules still apply, so disclose the CVL anyway.
How does The Insurability Framework™ apply after a CVL?
The Insurability Framework is how we turn a difficult history into a risk an underwriter can say yes to. For a CVL it means explaining the cause of failure, proving what has changed, presenting the directors' track record honestly, and matching the risk to insurers whose appetite includes post-insolvency businesses.
Most declines after a CVL are not considered decisions. They happen because a tick box sent the application down an automatic route, or because a broker sent a thin submission with no explanation. The Insurability Framework fixes that by building the presentation before anything goes to market:
- Cause. A clear, factual account of why the old company failed, supported by the liquidator's report or statement of affairs where possible.
- Change. What is different in the new business: funding, customer spread, contract terms, credit control, risk management.
- Conduct. Your trading record before the failure, your claims history, and the position on the directors' conduct report.
- Market. Placement with Lloyd's syndicates and specialist MGAs that write post-insolvency risks, rather than insurers that decline them automatically.
What cover will your new company need?
The same covers any business in your trade would need, starting with anything that is compulsory or a condition of your contracts. Employers' liability is a legal requirement once you employ staff. Public liability, contract works and professional indemnity are usually demanded by clients before you can start work.
| Cover | Why the new company needs it | The CVL angle |
|---|---|---|
| Employers' liability | Compulsory from your first employee, with a legal minimum limit of £5m. Most policies provide £10m. | Insurers will still quote, but some want the cause of failure before they offer terms. |
| Public and products liability | Needed for almost every contract, site and premises. | The most commonly declined cover online after a CVL, because it's often bought through quote engines. |
| Professional indemnity | Essential for consultants, designers, advisers and many contractors. | Underwriters look closely at whether claims against the old company could follow you. |
| Property and stock | Protects premises, contents, equipment and stock. | Moral hazard screening applies here most. Expect questions about security and how the assets were acquired. |
| Business interruption | Replaces lost profit after insured damage. | Sums insured need care, because a new company has no trading accounts to base them on. |
| Directors' and officers' | Protects directors personally against claims about how they run the company. | Insurers will ask about any claims or investigations arising from the CVL. |
What does your next step look like?
Pick the option closest to your situation to see what to put in place and what insurers will ask.
Choose an option above to see the result.
Highest scrutiny, and the most common route. Insurers will want to know what has changed between the old business and the new one. Put in place employers' liability, public liability and any contract-required cover before you trade. Prepare a written account of the cause of failure, the date of the CVL and the liquidator's details. Our phoenix company insurance guide covers this route in depth.
Expect questions about the assets. Buying plant, stock or equipment from the liquidator is legitimate, but property insurers will ask how the assets were valued and bought. Keep the sale agreement and the valuation. Insure the assets from the date ownership passes to you, not from your first trading day, and check any finance agreements on them.
The CVL still travels with you. A sole trader is the business, so the question on the form becomes whether you have been involved in an insolvent company. You'll need public liability, and employers' liability as soon as you take anyone on. Answer the insolvency question yes and explain it, even though you are no longer trading through a company.
The new company's insurers need to know. When you join a board, the company's own proposal forms will ask about every director's history. Tell the company before its next renewal or mid-term change, so they can disclose it. Also check whether their D&O policy has an exclusion for directors with previous insolvencies.
How does a CVL affect directors' and officers' cover?
The old company's D&O policy normally goes into run-off when the company enters liquidation. It still responds to claims about your past decisions as a director, but it won't cover anything new. That matters because liquidators can bring claims against directors for wrongful trading or misfeasance, and those claims are exactly what D&O exists for.
A liquidator has a duty to investigate how the company was run and can bring proceedings under the Insolvency Act 1986. The main heads of claim are wrongful trading (carrying on trading when you knew, or ought to have known, that insolvent liquidation couldn't be avoided) and misfeasance (breach of duty or misapplication of company money). Many D&O policies respond to defence costs for these claims, subject to their exclusions for dishonesty and for insured-versus-insured claims.
If the old company had D&O cover, keep the policy wording and find out how long the run-off lasts. If it didn't, that gap can't be filled after the event. For the new company, D&O is worth considering from day one. Expect the proposal to ask about any claims, investigations or disqualification proceedings arising from the CVL. Our directors' and officers' insurance guide explains the cover itself.
What happens to claims made against the old company?
Claims against the old company are made against the liquidation, not the new business. If the old company was insured when the incident happened, the claimant can pursue the insurer directly under the Third Parties (Rights against Insurers) Act 2010. Your new policies won't respond to the old company's liabilities.
Under the Third Parties (Rights against Insurers) Act 2010, the rights of an insolvent company under its liability policy transfer to the person it injured or damaged. That is why an injured worker or a customer can still recover from an employers' or public liability policy years after the company has gone. Long-tail claims such as industrial disease are often handled this way.
Two things follow for the new business. First, insurers will want comfort that the new company hasn't taken on the old company's liabilities, especially if it bought the old company's goodwill or is doing the same work for the same clients. Second, if you are a consultant or designer, claims about work you did through the old company may still come in. That's what PI run-off cover is for.
Does reusing the old company name affect your insurance?
It can affect both your legal position and your insurance. Section 216 of the Insolvency Act 1986 bars directors of an insolvent liquidated company from using the same or a similar name for five years, unless they get court permission or meet one of the statutory exceptions. Insurers will also ask directly about any connection between the two companies.
Section 216 applies to anyone who was a director in the 12 months before the liquidation. Breaching it is a criminal offence and can make you personally liable for the new company's debts. If you plan to trade under a similar name, take advice from your insolvency practitioner first.
From an insurance point of view, a similar name makes the link between the two companies obvious. Underwriters will treat the new business as a continuation of the old one, so the explanation of what has changed matters even more. Never try to hide the connection. A name search at Companies House takes an underwriter seconds.
Are you ready to present your CVL to an underwriter?
Tick everything you can already provide. The more you have ready, the stronger the submission and the wider the choice of insurers.
An underwriter can work with what you have. We can help fill the gaps.
What drives the cost of insurance after a CVL?
The trade you're in still drives most of the premium. The CVL adds a loading or narrows the market, depending on how recent it was, why the company failed, whether there were claims, and what the conduct report found. A well-explained CVL from a customer's collapse costs far less to insure than an unexplained one.
These are the factors underwriters weigh most heavily:
- Time since the CVL. A liquidation from last month draws more questions than one from four years ago with a clean record since.
- Cause of failure. External shocks, such as a customer's insolvency, are viewed very differently from failures caused by poor control or unpaid tax.
- Claims history. Claims in the years before the failure suggest the risk problems may come across with the directors.
- Conduct outcome. A clean conduct report helps. Disqualification proceedings or an undertaking shrink the market sharply.
- Same trade or new trade. Continuing the same activity needs the strongest "what has changed" story.
- Creditor position. Large losses to HMRC or suppliers draw more scrutiny than a modest shortfall.
- Risk management. Documented health and safety, maintenance and security controls offset much of the concern.
How hard will your risk be to place?
Choose the description that fits best for an indication of where your risk sits in the market.
Choose a description above to see the indication.
Standard to specialist market. Some mainstream insurers will consider this with a clear explanation, and specialist markets will usually offer competitive terms. Disclose it fully and expect a modest loading at most.
Specialist market. Online quote engines will likely decline. Lloyd's syndicates and MGAs will consider it with a strong cause-and-change presentation. Expect closer questions on property and liability, and possibly higher excesses in the first year.
Specialist market with careful presentation. Fewer insurers will quote, and terms may include exclusions or conditions. The quality of the submission makes the biggest difference here. Have the liquidator's details and your claims history ready before approaching anyone.
Hard to place, but not impossible. A small number of specialist markets will consider this, usually with restricted cover and higher premiums. Don't approach insurers one by one. Every decline you collect has to be disclosed on the next application. Use a specialist broker who knows which markets to approach first.
Illustrative case studies
These composite examples are illustrative only. They show common post-CVL situations and how a placement typically comes together. They are not real clients, and names and details are invented.
Illustrative case 1
The groundworks contractor caught by a main contractor's collapse
A groundworks company entered a CVL after a main contractor went into administration owing it a large retention and several months of valuations. The director set up a new company with two of the original crews and needed public liability, employers' liability and contractors' plant cover to start on a new framework. Three online quotes ended at the insolvency question.
We built a submission around the cause: the main contractor's administration, the debt owed, and the creditor position shown in the statement of affairs. We added what had changed: payment terms with stage payments, credit checks on every main contractor, and no single client above a set share of turnover. A Lloyd's syndicate offered terms close to standard, with a modest loading in the first year.
Illustrative case 2
The restaurant owner who didn't disclose
A restaurant company went through a CVL after its energy costs and rent arrears became unmanageable. The owner opened a new venue through a new company and bought a package policy online, answering no to the insolvency question because the new company had never been insolvent. Eighteen months later, a kitchen fire closed the venue.
The insurer's investigation found the previous liquidation through Companies House. It concluded it would have charged a higher premium had it known, and reduced the claim proportionately under the Insurance Act 2015. The owner came to us at renewal. We disclosed the CVL and the claim in full and placed the risk with a specialist insurer. The lesson is that the question applies to directors, not just the company.
Illustrative case 3
The consultant with a conduct report still open
An IT consultancy entered a CVL after losing its main contract. Its director started a new consultancy and needed professional indemnity before a client would sign. The liquidator's conduct report had not yet been submitted, so the director couldn't confirm the outcome.
We presented the CVL with the liquidator's contact details and a letter confirming the director had cooperated fully with the liquidation. We also confirmed that no claims were outstanding against the old company. A specialist PI market offered cover with an exclusion for any claim about work done through the old company. That left PI run-off for the old work as a separate item to arrange.
How do you get your new business insured after a CVL?
Gather the facts of the CVL, write a short explanation of the cause and what has changed, disclose it consistently on every application, and go through a specialist broker rather than quote engines. Arrange the compulsory and contract-critical covers first, before you trade, take on staff or sign contracts.
- Gather the facts. The old company's name and number, the date of the resolution, the liquidator's details and the statement of affairs. The GOV.UK guidance on liquidation explains the paperwork the process creates.
- Write the cause of failure. One or two paragraphs, factual and specific. Underwriters respond far better to a clear account than to a vague one.
- Show what has changed. Funding, customer spread, contract terms, credit control, and any new risk management.
- Disclose the same way every time. Every proposal form and every renewal. Inconsistent answers across insurers are a red flag.
- Avoid quote engines. They can't take an explanation, and every automatic decline becomes another thing to disclose.
- Use a specialist broker. Someone with access to Lloyd's and MGAs who write post-insolvency risks, and who presents the risk properly the first time.
- Put the essential covers in place first. Employers' liability before your first employee, and public liability before your first job.
- Keep records for renewal. A clean first year with no claims is your strongest evidence when the policy renews.
Glossary
- Creditors' voluntary liquidation (CVL)
- A formal insolvency process, started by the directors and shareholders, to close a company that can't pay its debts. A licensed insolvency practitioner is appointed as liquidator.
- Members' voluntary liquidation (MVL)
- A solvent closure in which all creditors are paid in full. Insurers view it very differently from a CVL.
- Compulsory liquidation
- A winding-up ordered by the court, usually on a creditor's petition, often HMRC.
- Administration
- An insolvency process aimed at rescuing the company or getting a better result for creditors than liquidation would.
- Insolvency practitioner
- A licensed professional authorised to act as liquidator, administrator or supervisor in insolvency procedures.
- Liquidator
- The insolvency practitioner who takes control of the company, realises its assets and distributes the proceeds to creditors.
- Statement of affairs
- A document setting out the company's assets, liabilities and creditors at the start of the liquidation.
- Directors' conduct report
- The liquidator's report to the Insolvency Service on the conduct of each director in the three years before the insolvency.
- Disqualification
- A court order or undertaking barring someone from acting as a director for between 2 and 15 years.
- Wrongful trading
- Continuing to trade when a director knew, or ought to have known, that insolvent liquidation couldn't be avoided.
- Misfeasance
- A breach of duty by a director, such as misapplying company money, which a liquidator can pursue.
- Phoenix company
- A new company that carries on the same or a similar business after an earlier company has failed. Legitimate in itself, but closely scrutinised.
- Prohibited name
- A name the same as or similar to that of an insolvent liquidated company, restricted for five years under section 216 of the Insolvency Act 1986.
- Fair presentation
- The duty under the Insurance Act 2015 to disclose every material circumstance to an insurer before cover starts and at each renewal.
- Material circumstance
- Any fact that would influence an insurer's decision to offer cover or the terms it offers.
- Run-off cover
- Cover that continues to respond to claims about past activity after a business has stopped trading.
- Managing general agent (MGA)
- A specialist underwriting agency with authority to write business for insurers, often in niche or hard-to-place classes.
Frequently asked questions
Can I get business insurance after a CVL?
Yes. Specialist insurers, Lloyd's syndicates and MGAs regularly insure businesses run by directors with a previous CVL. The key is full disclosure with a clear explanation of why the old company failed and what has changed. Online quote engines often decline automatically, so a specialist broker is usually the fastest route.
How long do I have to declare a CVL to insurers?
It depends on the question each insurer asks. Many ask about the last five years, some about ten, and some about any involvement ever. If the form doesn't specify a period, or asks a general question about anything material, disclose it. When in doubt, disclosing is always safer.
What if the proposal form doesn't ask about insolvency?
You still need to disclose it. The Insurance Act 2015 requires a fair presentation of the risk, which covers any material circumstance whether or not there is a specific question. Most forms also include a catch-all question about anything else that may affect the insurer's decision.
The new company has never been insolvent. Do I still have to say yes?
Yes, if the question asks about directors as well as the business, which most do. Insurers rate a new company on the people running it, because it has no history of its own. Answering no because the new company itself is clean is one of the most common reasons claims are later reduced or refused.
Will my premium be higher after a CVL?
It may be, particularly in the first year or two. How much depends on the cause of failure, how recent it was, your claims history and the trade. A well-presented CVL caused by something outside your control often attracts only a modest loading, or none.
Can I use the same insurer as the old company?
Sometimes, but not always. If the old company owed that insurer premium, or the insurer was a creditor in the liquidation, it may decline. Other insurers may be more open to a fresh relationship.
What happens to the old company's insurance policies?
They are controlled by the liquidator. Some are cancelled with any return premium going to creditors, and the liquidator may arrange separate cover for assets awaiting sale. None of the old company's policies transfer to your new business.
Does a CVL affect my directors' and officers' cover?
The old company's D&O policy usually goes into run-off, covering claims about your past decisions but nothing new. Liquidators can bring claims against directors for wrongful trading or misfeasance, so check what the run-off period is. For the new company, D&O proposals will ask about any claims or investigations arising from the CVL.
Who pays claims made against the old company?
The old company's insurer, if the company was insured when the incident happened. Under the Third Parties (Rights against Insurers) Act 2010 a claimant can pursue that insurer directly. Your new company's policies are not liable for the old company's past.
Can I reuse my old company's name?
Only within the rules. Section 216 of the Insolvency Act 1986 restricts directors of an insolvent liquidated company from using the same or a similar name for five years, unless they get court permission or meet a statutory exception. Take advice from your insolvency practitioner before using a similar name.
What if I have been disqualified as a director?
While disqualified, you can't act as a director or be involved in managing a company without court permission. You may still trade as a sole trader, and you'll need to disclose the disqualification. The insurance market for disqualified individuals is small, but specialist insurers do consider these risks.
Is a members' voluntary liquidation treated the same as a CVL?
No. An MVL is a solvent closure in which all creditors are paid in full, and insurers view it far more favourably. Still disclose it if a form asks about any liquidation, but explain that it was solvent. In most cases that answers the insurer's question straight away.
Related guides
About this guide. This guide is general information about insurance after a creditors' voluntary liquidation in the UK. It is not legal, insolvency or financial advice, and it is not a quotation or an offer of cover. Whether cover is available, and on what terms, depends on each insurer's underwriting and the policy wording.
For advice on the liquidation itself, on director conduct matters or on using a prohibited name, speak to your insolvency practitioner or a solicitor. The case studies are illustrative composites, not real clients.
Miller & Partner Limited is an Appointed Representative of Gauntlet Risk Management Ltd, which is authorised and regulated by the Financial Conduct Authority. Miller & Partner Limited is registered in England and Wales and trades from Vivian House, Roman Bridge Close, Mumbles, Swansea SA3 5BG. Contact us at enquiries@millerandpartner.co.uk.
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