What is run-off cover?

You may not think you need business insurance after you’ve stopped working, or changed directions in your career, but sometimes mistakes or accidents can come to light long after you’re not in your profession anymore. If that happens without cover, you may have to fork out for legal or compensation costs from your own pocket. That’s where run-off insurance comes in.

So, what is run-off cover?

Run-off insurance covers you for claims that are made regarding previous goods and services you’ve provided after you’ve stopped trading or practising.

Why do I need run-off cover?

The main reason many people add run-off insurance to their policy is to protect themselves from potential future claims for past services. There are a few ways in which this could play out.

For instance, if you decide to act on a side hustle but want to make sure that your previous work doesn’t affect your new venture. Or, if you’re retiring and want to make sure you’re covered after you’ve stopped working completely – these are two common scenarios that would be suitable for run-off insurance.

While many people find an extra bit of protection after they’ve stopped working a comfort, run-off cover is especially useful for those who provide professional services such as consultancy, designs or advice. This is because there’s a higher risk that a design you’ve created or some advice you’ve given causes adverse effects after some time, instead of immediately. So, it’s important to cover yourself in case this happens.

How does run-off insurance work?

Similar to professional indemnity insurance, run-off cover works on a ‘claims made’ basis. This means if a claim is made and a run-off policy is in place, this is the policy the claim will be based on, not the policy that was in force at the time.

So, let’s say you work in software and IT, and some software you developed – but no longer support – is found to be inadequate or broken by businesses that licensed the software and you don’t have run-off insurance, you would be liable for that claim even if you had a policy at the time the software was developed.

Some other examples include:

• If you offered accounting services from a business that was no longer operating and errors or omissions were found long after you’d stopped working there.
• If you offered beauty or massage therapy treatments and a customer suffered a reaction as a result of the treatment after you’ve ceased trading.
• If you were a fitness instructor and a previous client suffered an injury as a result of your coaching may later seek compensation.

How much run-off cover do I need?

The amount of cover you would need depends on your industry and role. Some industries even require you to have run-off cover for a certain period of time as some claims can be made months or even years after work has ceased.

How can I get run-off cover?

You can’t get a quote for run-off insurance on its own. Rather, it would be an add-on to a professional indemnity insurance policy. Whether you have professional indemnity insurance with us or not, we can help you get the cover you need. Simply get in touch with one of our team via web chat, phone or email.