If you are selling your business and/or retiring soon and you have a current Professional Indemnity Insurance Policy you should consider the need for further cover should a claim arise in the future. Professional Indemnity Run off Cover provides indemnity for unknown claims and/or circumstances that may arise from your previous business activities and during the period of Run off Insurance. It only provides cover for prior activities and does not cover any future activities after the run off date.
Run off Cover policies are commonly offered and reviewed from year to year. However, insurers are increasingly able to offer multi-year policies which can be a preferable option.
How Long Should Run off Cover be maintained?
Run off Cover should generally be held for a minimum of 12 months. However, it is important to assess your exposure based on potential risks associated to your business activities and the possibility that claims will arise.
Some industries, such as Construction and Engineering, have long tail liability so it can depend upon the Statute of Limitations legislation applying to that particular claim. In some cases, a claim can be brought in excess of 15 years after the act, error or omission occurred.
If you are unsure whether or not you are covered, it is important to seek advice from your insurance broker.
Disclaimer – “This material contains general information only and may not suit your particular circumstances. To decide if a policy is right for you please carefully read the relevant Product Disclosure Statement (PDS) and/or Policy wording. While we have exercised due care and skill in preparing this information, Optimum Insurance Services (Optimum) does not accept any legal responsibility or liability for negligence or otherwise to you or anyone else who seeks to rely on this information. This includes, without limitation, loss arising from a possible failure of the information to comply with statutory or regulatory requirements or the failure of the information to identify other terms and conditions beyond those considered in this document. You should obtain advice to ensure that your policy provides adequate cover for your circumstances. “Optimum Insurance Services Pty Ltd is a Corporate Authorised Representative of Insurance Advisernet Australia Pty Ltd (Car No. 291220), Australian Financial Services Licence No 240549, ABN 15 003 886 687.”
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