Run-off cover is a professional indemnity policy bought to respond to claims arising from a firm’s past work after the firm has ceased to trade. Because PI is written on a claims-made basis, the moment a firm stops renewing a working policy, future claims have nothing to attach to — unless run-off cover is in place. Run-off bridges that gap for a defined number of years.
What run-off cover means in PI insurance
A working PI policy responds to claims notified during the period of insurance. When a firm stops trading, it stops buying working cover. Past clients can still bring claims for years afterwards under English contract and tort law — six years for simple contracts, twelve for deeds, longer in some tortious or latent-defect contexts. Without run-off cover, those late claims meet a wall of no insurance, and the firm’s principals or their estates are personally exposed.
Run-off cover continues the claims-made protection past the date of cessation. It typically:
- Covers claims notified during the run-off period that arise from work done during the firm’s working life.
- Carries a retroactive date that reaches back across the working period, not just from the cessation date.
- Provides a limit of indemnity, usually for the full run-off term (often expressed as aggregate over the run-off period or with a per-year aggregate).
- Cannot be cancelled mid-term in the way a working policy can be lapsed.
- Is paid for up-front (in part or in full) at the start of the run-off period.
Run-off is required by several UK regulators for professionals ceasing to practise. The required minimum run-off term varies by profession.
How run-off cover works in practice
Several features of run-off cover need active attention:
- Run-off term. Regulators set minimum periods. SRA-regulated solicitor firms generally require six years of run-off (and the SRA Minimum Terms make this an obligation of the closing firm). ARB recommends six years for architects, recognising that twelve-year deed limitation periods may extend the practical need. RICS, ICAEW and other bodies set their own positions. Run-off is sometimes bought beyond the regulatory minimum to align with the longest unexpired contractual limitation period on the firm’s books.
- Retroactive date. A critical point that catches firms out: run-off must have a retroactive date that goes back across the working period, not just from cessation. Otherwise the run-off has nothing meaningful to cover. See retroactive date PI.
- Limit of indemnity. Run-off is normally written at the same limit (or higher) as the last working policy, often aggregated across the full run-off period. Some wordings allow a per-year limit, but aggregate-over-the-term structures are common.
- Premium structure. Run-off premium is usually expressed as a percentage of the last working policy’s premium and paid as a single lump sum (or in some cases staged across the first few years). Total premium for a six-year run-off typically lands between 100% and 300% of the last working annual premium, depending on profession, claims experience, and insurer appetite. For higher-risk professions and firms with recent claims, the multiple can be higher.
- Insurer continuity. Run-off is usually offered by the firm’s last working insurer. Securing run-off from a different insurer (a “third-party run-off”) is possible but harder, particularly mid-term.
- Endorsements. Some extensions on the working policy (defined-activity cover, regulatory defence costs, cyber) may or may not roll into the run-off. The schedule should be checked endorsement by endorsement.
Worked example: run-off cover for a small UK practice
A two-partner UK surveying practice with £400,000 annual fee income, £1m PI limit each-and-every, defence costs in addition, and £5,000 excess decides to wind up in May 2026. The last working policy’s annual premium is £8,500. The principals plan to retire.
The broker arranges six years of run-off cover (the RICS standard minimum) with the firm’s current insurer. The run-off:
- Carries the same £1m limit, expressed as aggregate over the six-year term.
- Has a retroactive date matching the firm’s first PI policy in 2012, preserving cover for all the firm’s working history.
- Includes defence costs in addition to the limit, mirroring the working policy.
- Excess is £5,000 per claim, as before.
The run-off premium is quoted at 240% of the last working premium — £20,400 — paid up-front in May 2026 and covering claims notified between May 2026 and May 2032.
During the run-off period, two claims are notified:
- A 2019 boundary survey: claim notified February 2028, settles at £85,000 with £25,000 defence costs.
- A 2021 commercial valuation: claim notified August 2030, settles at £310,000 with £70,000 defence costs.
Both claims relate to work done within the retroactive period and notified within the run-off term, so both respond. The firm pays £5,000 excess on each. The aggregate run-off limit of £1m has £605,000 paid out (settlements only — defence costs were in addition) leaving £395,000 of aggregate run-off available for any further claims notified by May 2032.
If the firm had not bought run-off, neither claim would have triggered any cover and the former partners would have been personally exposed to roughly £490,000 of combined settlement and defence costs (plus interest).
The figures are illustrative. The structural point is that the £20,400 of run-off premium bought protection that the principals would otherwise have funded personally.
When this matters most
Run-off matters most:
On any cessation of trading. Sole practitioners retiring, partnerships dissolving, limited companies being wound up, mergers where the absorbed entity is dissolved rather than continuing. In each case, ongoing claims-made protection ceases unless run-off is bought.
On merger or sale. Where a firm is acquired and its principals continue with the acquirer, the acquired firm’s working PI usually ceases. Either the acquirer’s policy must extend to cover the acquired firm’s past work (with a retroactive date going back across it), or run-off cover for the acquired firm must be bought separately.
On change of legal structure. Incorporating a partnership into an LLP, or restructuring an LLP into a limited company, can trigger a need for run-off on the old entity if its identity does not survive.
Where deeds extend liability beyond six years. Construction professionals — architects, engineers, surveyors — frequently sign deeds of appointment that carry twelve-year liability. Six years of run-off may not be enough; the firm should consider whether residual deed exposure justifies a longer run-off term.
For regulated firms where run-off is mandated. Failure to arrange run-off can be a regulatory breach independent of any claim. Regulators including the SRA, ARB and RICS have specific positions on cessation and run-off; the relevant minimum terms should be checked at the point of decision.
Common variations and market wording
UK PI run-off wordings vary. Common features and phrases:
- “Run-off cover for six years from [cessation date].” Standard. The cover responds to claims notified during the six years from the stated cessation date.
- “Aggregate limit for the run-off period.” A single aggregate limit applies for the whole run-off term, not per year. This is the most common structure.
- “Per annum limit during run-off.” Some wordings provide a per-year limit during the run-off term, with the limit resetting each anniversary. Less common but more protective in a multi-claim run-off year.
- “Run-off premium payable in full on inception.” Lump-sum up-front. Some wordings allow staged payment over two or three years; others insist on the full sum at inception.
- “Retroactive date preserved from working policy.” The run-off retroactive date matches the last working policy’s retroactive date, preserving cover for all historic work.
- “No cancellation during the run-off term.” Run-off cannot be lapsed by the insured to recover unused premium. The cover is for a fixed period.
- “Successor practice clause.” Some run-off wordings address what happens if the principals later join a successor firm; the wording sets out whether the successor takes over the run-off or whether the run-off continues separately.
The wording on the schedule is what governs. Brokers should set out the run-off term, limit structure, retroactive date and premium structure explicitly in writing before binding.
Related concepts
- Claims-made vs occurrence PI — why run-off is necessary at all.
- Retroactive date — must extend across the working period on run-off.
- Policy period — the equivalent timing concept for working policies.
- MTC — minimum terms and conditions — where regulators require run-off to be arranged.
Frequently asked questions
How long does PI run-off cover need to last?
The minimum varies by profession. SRA-regulated solicitor firms generally require six years of run-off. ARB recommends six years for architects, with twelve commonly considered where deed appointments are in play. RICS, ICAEW and other regulators set their own positions. Six years aligns with the basic contractual limitation period under English law. Construction-related practices often consider twelve years because building contracts are commonly executed as deeds.
Who pays for run-off cover?
The ceasing firm pays. In a partnership or LLP, the partners normally fund it from the firm’s reserves at the point of dissolution. In a sole practice, the practitioner pays personally or from the practice’s residual funds. In a company wind-up, the run-off is normally paid from the company’s assets before the wind-up is completed. The premium is usually a single lump sum on inception of the run-off.
How much does PI run-off cost?
Run-off premium is typically expressed as a multiple of the last working policy’s annual premium. Common ranges in the UK market for six-year run-off are between 100% and 300% of the last working premium, paid as a single sum. Higher-risk professions, recent claims experience, and longer run-off terms push the multiple higher. The premium is for the whole run-off term, not annual.
What is the retroactive date on a run-off policy?
It should match the last working policy’s retroactive date, extending back across the firm’s working history. A run-off whose retroactive date is the cessation date covers nothing meaningful, because no new work is being done. The retroactive date should be set out explicitly on the run-off schedule.
Can I cancel run-off cover if no claims arise?
Generally no. Run-off is typically written as a fixed-term policy that cannot be lapsed by the insured. The premium is paid in full at the start and is not refundable for an unused period. This is part of why run-off premium is structured the way it is.
What happens if I want to start practising again during run-off?
Returning to practice during a run-off period is a material change that needs to be discussed with the insurer. Typically, a new working policy is arranged for the new entity, and the run-off either continues alongside (for the original entity’s claims) or is cancelled and replaced with full prior acts cover on the new working policy. The right structure depends on whether the new entity is legally the same as the old one and whether the new insurer will absorb the historic exposure.
Does run-off cover defence costs and regulatory action?
The run-off largely replicates the cover under the last working policy, including how defence costs are treated. If the working policy had defence costs in addition to the limit, the run-off usually does too. Regulatory defence costs extensions, where present in the working policy, may or may not roll into run-off; the schedule should be checked.
What if I cannot afford the run-off premium?
This is a practical risk. Run-off premium is sometimes a substantial lump sum at the point a firm is winding up its affairs. Options include staged payment where the insurer will agree it, financing the premium through a premium finance arrangement, or buying shorter-term run-off and extending year-by-year (though this carries the risk of an insurer declining a renewal mid-tail). Planning for run-off premium should ideally start before the cessation decision is finalised.
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About Apex Insurance Brokers Ltd
Apex Insurance Brokers Ltd is a Bristol-based insurance broker authorised and regulated by the Financial Conduct Authority (firm reference number 724952). The company is registered in England and Wales under Companies House number 07014570. Contact: info@apexinsurancebrokers.co.uk | 0117 325 0027.
Last reviewed: May 2026 by Apex Insurance Brokers Ltd.
Important: this article is general information, not advice on your specific circumstances. For advice on PI insurance for your firm, contact us on 0117 325 0027 or info@apexinsurancebrokers.co.uk.