How UK PI Insurers Differ on Run-Off Terms

Why run-off exists at all

A claims-made policy responds to claims first made against you during the policy period, not to when the work was done. The moment the last policy expires without replacement, cover for every past project expires with it. A client can still sue years after a firm closes — in England and Wales, claims can arrive six years or more after the work, depending on the cause of action. Run-off cover is a policy (or an endorsed continuation of the last policy) that stays live after trading stops, covering claims made during the run-off period for work done before cessation. Every insurer offers something in this space; the terms are where they diverge.

Automatic run-off vs optional run-off

Some wordings grant a short period of automatic run-off when a firm ceases trading — cover simply continues for a defined window without a fresh purchase. Others treat run-off purely as an option: cover ends at expiry unless you actively buy a run-off policy, sometimes within a strict deadline after cessation. A few sit in between, offering automatic cover only in specific events such as death or incapacity of a sole practitioner. The practical check is simple: read the cessation-of-business clause in your current wording and establish, before you need it, whether anything happens automatically and for how long.

Duration: from twelve months to six years and beyond

Run-off is commonly offered in blocks — twelve months at a time, or fixed multi-year terms. Six years is a widely used benchmark because it mirrors the basic limitation period for contract claims in England and Wales, but it is a convention, not a rule: some exposures justify longer (latent defect claims in construction, for example), and some insurers will not commit beyond shorter terms up front. Insurers also differ on whether a multi-year term is guaranteed at inception or merely renewable at their discretion — a distinction that matters enormously to a firm that no longer exists to negotiate.

Single-premium vs annually renewable run-off

There are two payment models. A single-premium run-off policy buys the whole period — say six years — in one transaction at the start, giving certainty of cover and of cost. Annually renewable run-off is cheaper in year one but must be renewed each year by a business that has stopped trading, at whatever terms the insurer then offers — and if that insurer leaves the market or declines to renew, a closed firm can struggle to find another carrier willing to pick up historic-only exposure. Insurers differ on which models they offer and on whether the price of future years is fixed, capped, or open. For anything other than a very short run-off need, the certainty question deserves as much attention as the first-year price.

Regulator and professional-body minimums

For some professions, run-off is not optional. ICAEW’s Professional Indemnity Insurance Regulations require accountancy firms ceasing practice to arrange run-off cover for at least two years, with best endeavours to maintain it for six. Solicitors in England and Wales are covered by the SRA’s arrangements: under the SRA Minimum Terms and Conditions, a firm that closes without a successor practice must have six years of run-off cover, provided by its last participating insurer. Other bodies — including RICS for surveyors and ARB/RIBA frameworks for architects — set their own run-off expectations. If you are regulated, your body’s minimum is the floor: an insurer’s standard run-off offering may or may not meet it, and it is your responsibility to check.

Cancellation, non-renewal and acquisition

Insurers also differ on what triggers run-off mechanics mid-term. Many wordings contain change-of-control provisions: if the firm is acquired or merges, the policy may convert to run-off automatically, may continue for the remainder of the period covering only pre-acquisition work, or may be cancellable by the insurer — three very different outcomes for the same event. On non-renewal, some insurers will quote run-off terms to their departing insured as a matter of course; others will not, leaving the firm to buy run-off in the open market where appetite for historic-only risk is thinner. If a sale, merger or retirement is even on the horizon, the time to establish your insurer’s position is before you sign anything.

What to check in your own wording

Five questions cover most of the ground: Does anything happen automatically when I cease trading, and for how long? What run-off durations will my insurer commit to, and are later years guaranteed or discretionary? Is run-off priced as a single premium or renewed annually? Does my professional body set a minimum, and does the offered run-off meet it? And what does the change-of-control clause do on a sale or merger? A broker can put these questions to the whole market rather than one insurer at a time.

Frequently asked questions

What is run-off cover in professional indemnity insurance?

Run-off cover keeps a claims-made PI policy responding after a firm stops trading. It covers claims first made during the run-off period arising from work done before cessation. Without it, cover for all past work ends the day the last live policy expires.

Is run-off cover automatic when a business closes?

Sometimes, briefly. Some UK wordings include a short automatic run-off period on cessation; many treat run-off as an optional purchase with a deadline. The cessation-of-business clause in your own wording is the only reliable answer, so check it before you close.

How long should run-off cover last?

Six years is the common benchmark, mirroring the basic limitation period for contract claims in England and Wales, and some regulators require it — the SRA’s arrangements provide six years for closing solicitor firms without a successor practice. Longer can be justified where latent claims are plausible; some professions have their own set minimums.

What is the difference between single-premium and annual run-off?

Single-premium run-off buys the whole period up front, fixing cover and cost. Annually renewable run-off must be re-bought each year by a business that no longer trades, at terms the insurer then chooses — and renewal is not guaranteed. Insurers differ on which they offer.

What happens to my PI policy if my firm is acquired?

It depends on the change-of-control clause. Some policies convert to run-off automatically, some continue covering only pre-acquisition work, and some become cancellable. Buyers’ lawyers usually insist the point is resolved before completion, so establish your insurer’s position early.

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