What is run-off cover in professional indemnity insurance?

Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05

Why run-off cover exists

Most professional indemnity policies in the UK are written on a claims-made basis. That is the single most important thing to understand about run-off. A claims-made policy responds to claims that are first made against you (and notified to insurers) during the period of insurance — not to the work that gave rise to them. It does not matter when you did the job; what matters is that you hold a live policy at the moment the claim surfaces.

That design works perfectly while a firm keeps renewing year after year. Each renewal picks up claims arising from all your past work, provided you were insured continuously. The problem appears the day you stop renewing. Once a firm ceases to trade, there is no new policy to buy and no live cover in place — yet the exposure from years of past advice, designs, or reports does not disappear overnight. A disgruntled client can still bring a claim long after the doors have closed.

Run-off cover solves exactly this. It keeps a claims-made policy responding to past work after the firm has stopped doing new work. Without it, a retired consultant or a dissolved partnership could face a claim with no insurer standing behind them.

When you need it

Run-off cover typically becomes relevant when a firm reaches the end of its life or changes shape. Common triggers include:

• Retirement or closure — a sole practitioner retires, or a company ceases trading and is wound up.
• Merger or acquisition — a firm is absorbed into another and the original entity ceases to exist. Cover for its past liabilities needs to be arranged, either as standalone run-off or by the acquiring firm.
• Ceasing a regulated activity — a firm stops offering a particular service but had previously advised on it.
• Change of legal structure — for example, converting from a partnership to a limited company, where the old entity carries residual liability.

In each case the principle is the same: work has been done, potential liability remains, but the ongoing PI policy that would normally have covered it has ended.

How long should run-off cover run?

The usual benchmark is around six years. That figure is not arbitrary — it tracks the primary limitation period in English law. Under the Limitation Act 1980, a claimant generally has six years from the date the cause of action arose to bring a claim for breach of contract or negligence. Holding run-off for six years therefore covers the bulk of the window in which a claim can realistically be brought.

The picture is not always that clean, and it is worth being precise about it:

• For latent damage in negligence (loss that only becomes apparent later), the Latent Damage Act 1986 can extend the effective period — broadly, three years from the date the claimant had the knowledge needed to bring a claim, subject to a fifteen-year long-stop.
• Because of this, some professionals choose to hold run-off for longer than six years, or a regulator may set its own minimum.

Some regulated professions make run-off mandatory. Solicitors, for instance, are required under the Solicitors Regulation Authority's rules to arrange a minimum period of run-off cover when a practice closes. Other bodies, such as RICS for surveyors, also impose run-off requirements. If you belong to a regulated profession, your regulator's minimum — not just the general limitation period — sets the floor. Always check your own rules.

If you're unsure how long your circumstances call for, speak to an Apex broker before you let your last policy lapse.

Run-off cover vs a live annual policy

It helps to see the two side by side, because they are not the same product doing the same job.

A live annual PI policy covers a trading firm. It responds to claims made during the year, arising from both past and current work, and it is renewed each year to keep that protection rolling forward. The firm is still generating new exposure, and the premium reflects ongoing activity.

Run-off cover covers a firm that has stopped trading. It responds only to claims arising from work already completed before the firm ceased — there is no new work being added to the risk. It is usually arranged for a fixed multi-year term (commonly six years) rather than renewed annually, and because the exposure only ever reduces over time, it is structured differently from a standard renewal.

Put simply: a live policy protects a business that is still operating; run-off protects the people behind a business that has closed, for what they did while it was open.

What limit of indemnity should run-off carry?

A sensible starting point is to match the limit you carried while trading. If your firm held, say, £1m, £2m, or £5m of cover as generic options during its working life, dropping the limit sharply for the run-off period can leave a gap precisely where a large historic claim might arrive. The right figure depends on the size and nature of the work you did, any contractual limits you agreed with clients, and your regulator's requirements. It is a judgement worth taking advice on rather than defaulting to the cheapest option.

Buying run-off: disclosure still matters

Arranging run-off cover is still a contract of insurance, so the Insurance Act 2015 applies. That Act imposes a duty of fair presentation of the risk — you must disclose material facts, including any circumstances that might reasonably give rise to a claim, honestly and clearly. If you are aware of a problem brewing when you buy run-off, that is exactly the kind of thing insurers expect to be told. Getting the presentation right at the outset protects your ability to claim later.

Larger or more complex risk? Speak directly to a director — call 0117 325 0027 or email info@apexinsurancebrokers.co.uk.

Common questions

Is run-off cover a legal requirement?

It depends on your profession. There is no single blanket law requiring every firm to buy run-off. However, several regulators — including the Solicitors Regulation Authority and RICS — make it mandatory when a regulated practice closes, and set a minimum period. If you are regulated, check your own rules; if you are not, run-off is strongly advisable rather than compulsory.

Who pays for run-off after a firm has closed?

The retiring principals or the closing firm normally fund it, and the cost is best planned for as part of winding down. In a merger or acquisition, the arrangement is often negotiated as part of the deal — sometimes the acquiring firm takes on the past liabilities under its own arrangements instead. Because there is no future income to offset it, run-off is a cost to build into your exit plan.

What happens if I retire without buying run-off?

You would be personally exposed. A claim arising from past work could be made against you with no live claims-made policy to respond, meaning defence costs and any damages could fall on you directly. For most professionals, the cost of run-off is modest set against that risk, which is why it is a standard part of closing responsibly.

If you're winding down a firm and want run-off arranged properly, start a conversation with Apex.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for reading your policy wording.