Run-off insurance explained: covering the years after you stop
Why claims-made cover leaves a tail
Most commercial liability policies for professional work — professional indemnity, directors’ and officers’ liability, most cyber policies — are written on a claims-made basis. The policy that pays is the one in force when the claim is made, not the one in force when the work was done. While you keep renewing, this is invisible: each new policy quietly picks up the whole of your past work. The moment you stop — because you have retired, closed, sold or merged — the machinery stops with you. Work done over an entire career is suddenly uninsured against any claim that arrives tomorrow.
Run-off cover is the answer: a policy, or a continuation of your last policy, that stays open to receive claims about work done before you ceased, for a defined period afterwards. Nothing new is insured — you are not trading — only the past.
Who needs it
Anyone leaving a business that carried claims-made cover, by any exit route:
Retirement. A professional winding down a practice keeps responsibility for advice given decades into the past. Retirement ends the fee income, not the exposure.
Closure. A company that stops trading and is eventually struck off can still face claims about its work — and, in some circumstances, so can the people behind it. Closure without run-off simply moves the risk from an insurer to you.
Sale. In an asset sale the selling company retains its history and normally needs its own run-off. In a share sale the question of who insures the pre-completion years is a negotiation point in the deal.
Merger. When practices combine, the new entity’s policy may or may not pick up each legacy firm’s past work. Where it does not, the legacy firm needs run-off of its own. This should be checked, in writing, before the merger completes.
How long run-off should last
Six years is the common benchmark, and it is not arbitrary: six years is the ordinary limitation period for contract claims in England and Wales, so it covers the window in which most claims can validly be brought. Some professions’ regulators build the same figure into their rules.
Six years is a benchmark, not a ceiling. Limitation can run from when damage is discovered rather than when the work was done, and some exposures are genuinely latent — design and construction defects being the classic example, surfacing years after practical completion. Professionals with long-tail work often carry run-off well beyond six years; the right horizon is a judgement about the work you actually did.
What it costs — the mechanics, not the number
Run-off is usually priced off your expiring premium and structured in one of two ways: a single premium buying a block of years up front, or an annually renewed policy whose premium generally reduces over time, because each passing year retires more of the risk. Single-premium deals buy certainty; annual deals spread the cost. Which is available, and at what level, depends on your profession, your claims history and the market at the time — which is exactly the conversation a broker has for you.
What happens if you skip it
The claim does not go away; the insurance does. A claim made after your last policy lapsed lands on whoever can be pursued — the company if it still exists, and in some circumstances the individuals behind it. Sole practitioners and partners are personally liable for their professional work, and that liability does not retire when they do: retired professionals, and in some cases their estates, can be pursued for old work. Defending even a groundless claim without an insurer behind you means funding lawyers personally. Run-off is how you make the tail someone else’s financial problem.
Regulated professions: minimum run-off is often mandatory
For several professions this is not a choice at all. Solicitors’ regulatory arrangements require run-off cover when a firm closes without a successor practice, and accountants’ professional bodies impose their own run-off requirements on firms ceasing practice. Architects and other regulated professionals face similar expectations from their regulators. The details — how many years, at what limit — are set by each regulator’s current rules, so check yours or ask us; the point here is that for regulated firms, closing without arranging run-off can be a regulatory breach as well as a personal risk.
How Apex arranges run-off
We arrange run-off as part of the exit, not after it: reviewing which of your covers are claims-made, getting terms from your existing insurer and from the wider market, weighing single-premium against annual structures, and making sure the cover starts the day the trading policy stops — no gap, no overlap, no forgotten renewal three years into retirement. If you are closing, selling or retiring, it belongs on the checklist next to the lawyers and the accountants.
Frequently asked questions
What is run-off insurance?
Cover that keeps a claims-made policy — typically professional indemnity, D&O or cyber — open to receive claims about work done before a business ceased, was sold or merged. It insures the past only; no new work is covered. Without it, cover for everything already done ends the day the last policy lapses.
Why six years?
Six years is the ordinary limitation period for contract claims in England and Wales, so a six-year run-off covers the window in which most claims can validly be brought. It is a benchmark, not a ceiling: limitation can run from discovery of damage, and latent exposures such as design defects justify longer periods.
How is run-off priced?
Usually off your expiring premium, either as a single premium buying a block of years up front or as an annually renewing policy whose premium generally reduces year on year as the old work recedes. Which structure is available depends on your profession, claims history and the market at the time.
Can I just let the policy lapse and take the risk?
You can, but the risk is personal. Claims about old work land on whoever can be pursued — the company if it exists, and in some circumstances the individuals behind it. Retired professionals and even estates can face claims, and defending one without an insurer means paying lawyers yourself. For some regulated professions, lapsing without run-off is also a regulatory breach.
Is run-off compulsory?
For some professions, yes. Solicitors’ regulatory arrangements require run-off when a firm closes without a successor practice, and accountancy bodies impose their own requirements on firms ceasing practice. The specific years and limits are set by each regulator’s current rules, so check yours before you close.
What if my business was sold rather than closed?
In an asset sale your company keeps its history and normally needs its own run-off. In a share sale, who insures the pre-completion years is a deal point — the buyer’s programme, seller-purchased run-off, or deal-specific insurance. Agree it in the sale documents rather than discovering the answer when a claim arrives.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.