Professional Indemnity Insurance Run Off Cover
What is Run-off Cover? If a policyholder chooses to sell his/her business and/or retire, Run off Cover may be purchased. It provides indemnify to the policyholder for any unknown claims and/or circumstances that may arise whilst the policyholder was still in business and during the period of Run off Insurance, (after the specified retroactive date and before the run-off date). The cover only provides cover for prior activities and does not cover any future activities after the run off date. Run Off Cover policies are commonly offered and reviewed from year to year, however, insurers nowadays are increasingly able to offer multi-year policies which is a preferable option for most.
How long should Run-Off Cover be? Run off cover should generally be for a minimum of 12 months. However, it is important for a policyholder to access their exposure based on potential risks associated to their business activities and the possibility of claims. It Some industries, such as Construction and Engineering have long tail liability and it can depend upon the Statute of Limitations legislation applying to that particular claim - in some cases, a claim can be brought in excess of 15 years after the act, error or omission occurred. It is important to seek advice if you are unsure from your broker or a legal adviser.
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