Why Is Professional Indemnity Run Off Cover Important?

We thought we’d raise an important issue regarding Professional Indemnity Insurance, what to do when you stop trading, cannot trade, or in the worst case in the event of your death.

Professional Indemnity insurance covers you for claims made against you during the policy period. It is called a ‘claims made’ basis of cover.  If you stop trading and cancel your cover then all cover ceases from the date of cancellation. Should a claim arise after that date (even if it relates to work carried out at a time when you had PI cover in place) the claim will not be met by your insurers.

The solution is to arrange what is known as ‘run off’ cover. Run off cover operates from the ‘run off’ date specified on the policy and will provide cover for work undertaken prior to the run off date (back to the Retroactive date shown on the policy). Typically cover is arranged on an annually renewable basis for a period of 6 years (to cover the limitation period for civil claims). The cover can be purchased by the policyholder or their estate.

If you would like further information regarding run off cover please give us a call.