Run-Off Cover

Run-off cover is an extension of your professional indemnity insurance that continues to protect you against claims made after you have stopped trading, retired, or changed careers. It covers work you performed while the original policy was active.

Because PI insurance operates on a claims-made basis, once you cancel your policy, there’s no cover for new claims. Run-off cover fills that gap.

Why It Matters

• Claims can arrive months or even years after you finish a project. Without run-off cover, you’d have no protection.
• Some professions and regulatory bodies require run-off cover as a condition of winding down your practice.
• If you’re selling your business, the buyer may not take on liability for your past work. Run-off cover protects you.
• It gives you peace of mind that closing or retiring from your business doesn’t leave you exposed.

Show Transcript

Okay, so you've decided to retire, change industries, or shut down your business. Congratulations. But before you walk away, there's one last policy you can't forget. Run-off cover. Run-off cover is a type of professional indemnity insurance that protects you after you stop trading. Here's why it's crucial. Even when your business closes, claims could still come in years later for work you did in the past. And without run-off cover, you're basically unprotected against those late claims. For example, if you're an accountant or a mortgage broker or a financial adviser and a client decides to sue you 2 years later for advice that you gave, your old policy wouldn't respond unless you kept run-off cover in place. So, before you hang up the boots, check with your broker about run-off cover. It's peace of mind that protects your past, even when you've already moved on to the next chapter.

When You Need It

• You’re closing your business or practice.
• You’re retiring from professional work.
• You’re changing careers and no longer need active PI insurance.
• You’re merging with or selling to another business and the buyer isn’t covering your past liability.
• You’re taking an extended break and cancelling your policy.

How It Works

• You hold a PI policy with a retroactive date of 2018 and you stop trading in 2026.
• You purchase run-off cover that extends your protection for a set period (commonly 3 to 7 years).
• If a claim is made against you in 2028 for work you did in 2023, your run-off cover responds.
• Without run-off cover, that same claim would have no policy to respond to.

Simple Examples

• An architect retires and buys 7 years of run-off cover. Three years later, a client discovers a design issue and makes a claim. The run-off policy covers it.
• A consulting firm is sold. The original owners take out run-off cover to protect themselves from claims about work done before the sale.
• A financial adviser changes careers. They purchase 5 years of run-off cover so they’re protected if any former clients make complaints.

Common Mistakes or Misunderstandings

• Thinking you don’t need it because you’ve stopped working. Claims can come in years after the work is done. No active policy means no cover.
• Assuming the new business owner covers your past work. Unless the sale agreement specifically says so, you’re still liable for work done under your name.
• Not buying enough years. The right period depends on the nature of your work. Construction professionals often need longer periods than consultants.
• Waiting too long to arrange it. Run-off cover should be set up before or at the time you cancel your active policy.

When to Speak to a Broker

If you’re planning to close, sell, or retire from your business and you’ve held professional indemnity insurance, talk to your broker about run-off cover before you cancel your active policy.

Need help?

If you’re winding down your business and want to make sure you’re protected for past work, reach out to Tank Insurance and we’ll help you arrange the right run-off cover.

Related Terms

• Claims-Made Policy - Run-off cover exists because PI insurance is claims-made, meaning you need an active policy when the claim is lodged.
• Retroactive Date - Your run-off cover maintains your retroactive date, protecting all work done from that date forward.