Run-off cover is used with certain claims-made insurance policies after a business stops providing the insured professional services.

It allows claims arising from past work to potentially be reported after the business has retired, closed, sold or otherwise ceased the relevant activities.

Why can run-off cover be important? #

Professional Indemnity Insurance is commonly written on a claims-made basis.

A claim can arise years after the professional work was completed. If the ordinary Professional Indemnity policy has ended before the claim is made, the business may need run-off cover for the claim to potentially fall within an active policy.

Run-off is generally intended for professional services performed before the business ceased the relevant activities. It is not normally intended to insure new professional work undertaken after the run-off period begins.

How long is run-off required? #

There is no universal period.

The appropriate duration can depend on:

• The profession
• Contractual requirements
• Regulatory requirements
• Professional registration requirements
• The type of projects undertaken
• Potential limitation periods
• Insurer availability

Some professions or contracts specify a particular period.

There is also no universal pricing formula. Insurers can structure and price run-off differently depending on the occupation, claims history, limit, previous premium and period of cover.

Ideally, run-off should be considered before the active Professional Indemnity policy expires or before the business ceases providing the insured services. Maintaining appropriate continuity is important with claims-made cover.

You can read our broader information about run-off insurance.

Contact our team if you are retiring, selling or closing a professional business and need to discuss run-off cover.