PI wording · Run-off
PI run-off cover — the decision framework for when you actually need it
Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Published 14 July 2026
Run-off cover is a familiar concept but the practical decision — do I need it, how long, at what limit, from which market — is nuanced. This page gives the decision framework: when run-off is mandatory, when it is prudent, and when the cost outweighs the benefit.
The three run-off scenarios
- Mandatory run-off. Regulator requires it. SRA six years post-cessation, ICAEW two years, FCA-authorised firms MIPRU adequacy, etc. No choice.
- Prudent run-off. Regulator does not mandate but professional liability tail extends beyond cessation. Individual professionals face personal exposure without cover.
- Optional run-off. Discretionary work with clear cessation and no material tail. Cost of run-off outweighs residual exposure.
Decision inputs
- Profession-specific regulator requirement.
- Nature of past work — latent claims risk, BSA 2022 s.135 exposure, DB-transfer historic advice.
- Statutory limitation periods — six years contract, six-plus-discoverability tort, longer for building safety.
- Personal exposure of individual professionals if the firm defaults.
- Cost of run-off vs perceived residual risk.
- Availability of run-off from the incumbent insurer — some markets restrict at cessation.
Sizing the run-off period
- Regulator minimum as the floor.
- Limitation period as the practical ceiling for most professions (six years post-act).
- BSA 2022 s.135 for architects and construction consultants — 15 years going forward, 30 years pre-June 2022.
- DB-transfer advice from IFAs — FCA has continued focus on historic exposure; consider longer run-off.
- Extended run-off for specific higher-tail matters — latent-defect buildings, tax-scheme advice.
Sizing the run-off limit
- Regulator minimum applies.
- Historic claims and notifications set a practical floor for meaningful cover.
- Turnover-based scaling under ICAEW 2.5x remains relevant for run-off sizing.
- Aggregation position — per-claim run-off vs aggregate run-off matters for future multi-claim events.
- Individual professional-partner exposure — run-off protects personal balance sheets after firm cessation.
Funding structures
- Single-premium at cessation — simplest, most common; annual expense written off at closure.
- Annual renewable — premium re-quoted each year; cover extended if firm not yet fully wound up.
- Escrow funded — portion of sale proceeds ring-fenced for run-off premium payments.
- Employer / partner-funded — individual partners share the cost pro-rata.
- Buyer-funded (in a practice sale) — buyer takes on run-off as part of consideration; check successor-practice implications.
When you might not need run-off
- Individual professional joining another practice — new practice's PII typically responds to future acts; prior acts covered by the previous employer's run-off (if the previous employer maintained it).
- Short-tail specialisms with limited residual exposure — some technical advisory work with clear scope-of-service closure.
- Very old cessations where limitation has passed for all conceivable claims.
- Retirement of individual with no direct client-facing responsibility — may rely on firm-level run-off.
In practice, for regulated professionals, mandatory run-off is common and optional-run-off is rare. Consider carefully before declining.
Frequently asked
Do I need PI run-off cover when I retire from a partnership?
Depends on the firm's continuing PI position. If the firm continues, its ongoing policy typically covers prior acts of retired partners. If the firm closes, run-off is needed to cover all partners' historic acts. Check the specifics of your firm's PII wording at retirement.
How long does run-off need to last for a closing solicitors' firm?
SRA requires six years mandatory. Longer is prudent for higher-tail work — conveyancing with latent-defect risk, corporate matters with prolonged limitation windows. Ten years is not uncommon for prudent firms.
Is run-off cover always available from the outgoing insurer?
Usually yes. Regulators require insurers writing SRA-qualifying business and ICAEW-eligible business to offer run-off at cessation. Non-regulated professional PI markets sometimes restrict at cessation.
How much does run-off cost?
Highly variable. SRA six-year run-off typically 2.5x-3.5x annual premium as a single-premium buy. ICAEW two-year run-off typically 1.5x annual. Architects and surveyors variable, especially for BSA-touching or valuation-heavy work. Apex quotes what the market returns.
Can I switch insurer for run-off?
Sometimes. Run-off can be placed with the outgoing insurer (simplest) or with another insurer willing to write it. Difficult-risk run-off may be Lloyd's syndicate business. A specialist broker tests both routes.
What if I only did a small amount of higher-risk work at the closing firm?
Sizing the run-off cover to the risk is the specialist broker's job. Higher-limit run-off for the sub-set of work with tail exposure; base-level run-off for the rest. Not every closing firm needs a single-limit high-cover run-off.
Does run-off cover regulatory investigation costs?
Depends on the wording. Newer wordings typically include regulatory investigation-cost cover subject to sub-limits; older wordings may exclude. Confirm at cessation.
What happens if I close and do not buy run-off?
For SRA firms, regulatory consequences follow (Cessation Period, cancellation of Practising Certificate). For other professions, the partners face personal exposure for claims arising within the limitation period. This is a genuinely bad outcome. Fund run-off if at all possible.