If you are retiring, selling or closing a professional practice, your Professional Indemnity Insurance should form an important part of your exit planning.
Stopping work does not necessarily end your exposure to professional negligence claims. A client may make an allegation months or years after the advice, design, valuation, report or professional service was originally provided.
Professional Indemnity Insurance is generally written on a claims-made basis. This means that, subject to the policy wording, appropriate insurance normally needs to be in force when a claim is first made or a circumstance is notified – not simply when the original work was carried out.
That is why Professional Indemnity run-off insurance can be essential after retirement or cessation.
Champion Professional Risks can arrange specialist multi-year PI run-off insurance for eligible professional firms, allowing between one and six years of cover to be secured under a single policy, with one premium agreed and paid at the outset.
For professionals who want to close their practice and move on without returning to the insurance market every year, multi-year run-off cover can provide greater certainty over the cost, terms and administration of their historic professional liabilities.
What is Professional Indemnity run-off insurance?
Professional Indemnity run-off insurance – also known as PI run-off insurance, run-off PI cover or Professional Indemnity Insurance after ceasing trading – is designed to provide cover for claims arising from professional work undertaken before a firm stopped trading.
For example, an accountant may retire after years of providing tax and corporate advice, a surveyor may close a practice after completing hundreds of valuations, or an architect may cease trading while their designs remain in use for years afterwards.
The business may have closed, but an allegation relating to that historic work can still arise.
Run-off insurance is intended to maintain protection for covered historic professional activities during the agreed run-off period, subject to the policy terms, conditions, limits, exclusions and retroactive provisions.
Do I need Professional Indemnity Insurance after I retire?
Potentially, yes.
Retirement, dissolution of a company or closure of a practice does not automatically remove liability for professional work undertaken previously.
Run-off cover should therefore be considered if you are:
- retiring from professional practice;
- closing a limited company;
- ceasing trading as a sole practitioner;
- winding down a partnership or LLP;
- selling a business where responsibility for historic liabilities remains with you; or
- restructuring a professional firm while retaining responsibility for previous work.
The position may be different where a continuing or acquiring firm has formally assumed the historic liabilities and has appropriate insurance in place. This should be established clearly rather than assumed.
For anyone planning retirement or closure, run-off arrangements should ideally be considered before the existing Professional Indemnity policy expires.
Annual PI run-off insurance or multi-year run-off insurance?
Traditionally, a professional firm entering run-off may continue renewing its Professional Indemnity Insurance annually.
That approach can provide flexibility, but it also means returning to the insurance market each year. Premiums, insurer appetite, policy terms and available capacity may all change during the run-off period.
For eligible firms, multi-year run-off insurance provides an alternative.
| Traditional annual run-off | Champion multi-year run-off | |
| Policy period | Typically renewed every 12 months | 1–6 years can be arranged under one policy |
| Renewals | Annual renewal required | No annual renewal during the agreed policy period |
| Premium | Reassessed at each renewal | Agreed and paid upfront |
| Future market conditions | Pricing and insurer appetite can change | Agreed cover is secured for the policy period |
| Administration | Repeated paperwork and renewal negotiations | One placement at inception |
| Flexibility | Arrangements can be reconsidered annually | Designed for firms prioritising longer-term certainty |
| Best suited to | Firms wanting year-by-year flexibility | Eligible firms seeking a defined insurance solution at retirement or closure |
Neither approach is automatically right for every firm. The appropriate structure depends on your profession, historic activities, regulatory requirements, claims history, existing insurance and the period for which cover may be required.
What are the additional benefits of multi-year PI run-off cover?
Beyond avoiding annual renewal, a multi-year placement can offer several additional advantages.
Specialist insurer capacity
Champion is supported by specialist insurer capacity, subject to underwriting and availability.
Policy wording review
Champion can compare the proposed run-off wording with your existing Professional Indemnity policy to identify material differences in areas such as limits, exclusions and insured activities.
This can be particularly important when moving from an active Professional Indemnity policy into run-off, as the objective should not simply be to obtain a policy for the required period, but to ensure the proposed arrangement is appropriate for the firm’s historic exposure.
Potential cost advantages
Multi-year placement may also provide cost advantages compared with purchasing successive annual policies in some circumstances.
Any saving will depend on the individual risk, profession, claims history, policy period and insurance market conditions and cannot be guaranteed.
Which professions should consider PI run-off insurance?
Run-off insurance can be relevant to almost any professional services business where historic advice, designs, reports, specifications, valuations or other professional services could result in a future claim.
Professions that may need to consider run-off cover include:
- accountants and accountancy practices;
- chartered surveyors and property professionals;
- architects and design professionals;
- consulting engineers;
- project managers;
- management and business consultants;
- IT and technology consultants; and
- other specialist professional service firms.
Eligibility for multi-year cover is subject to underwriting. Certain regulated professions may also have specific Professional Indemnity or run-off requirements that need to be considered separately.
How long do I need Professional Indemnity run-off cover?
There is no single run-off period that is appropriate for every professional firm.
The correct duration can depend on factors including:
- your profession;
- the nature of the work undertaken;
- contractual obligations;
- applicable limitation periods;
- historic projects or engagements; and
- requirements imposed by a regulator or professional body.
Six years is commonly relevant, but it should not be assumed that six years will eliminate every possible exposure. Some contractual and statutory liabilities can continue for longer.
The appropriate run-off period should therefore be considered in the context of the firm’s individual circumstances and, where appropriate, alongside professional or legal advice.
PI run-off insurance for accountants retiring or closing a practice
Accountants can face long-tail Professional Indemnity exposures because allegations relating to tax advice, accounts preparation, audit work, corporate transactions and other advisory services may arise well after the original engagement.
ICAEW’s Professional Indemnity requirements are particularly relevant for firms planning cessation. Where a firm ceases public practice, compliant cover must be maintained for at least two years, followed by an obligation to take all reasonable steps to maintain cover for a further four years.
For an accountancy practice planning retirement or closure, run-off insurance should therefore form part of the wider exit strategy.
A multi-year arrangement may be particularly attractive where the owners want to establish their insurance arrangements at the outset rather than return to annual PI renewals after the practice has closed.
PI run-off insurance for surveyors and property professionals
Surveyors can also carry substantial historic professional liabilities.
A claim concerning a valuation, building survey, project monitoring instruction or other professional service may emerge after the practice responsible for the work has ceased trading.
RICS-regulated firms need to consider the organisation’s specific Professional Indemnity and run-off requirements when closing a practice. RICS arrangements include six-year consumer run-off provisions, while firms must also consider appropriate protection for other historic liabilities.
For a retiring surveyor or property professional, appropriate run-off insurance can therefore be an important part of managing the practice’s legacy exposure.
PI run-off insurance for architects, engineers and design professionals
Architects, engineers and other construction professionals can face claims relating to projects completed many years previously.
Design allegations, specification issues and other professional negligence claims may emerge well after practical completion and potentially after the professional practice itself has closed.
ARB guidance states that principals or directors should take reasonable steps to maintain adequate run-off cover when they cease practice. It specifies a minimum of six years’ run-off cover in most of the UK and five years for those practising in Scotland, while also recognising that some liabilities can extend for longer.
Construction professionals should therefore look beyond the length of the policy alone. Limits of indemnity, exclusions, historic activities and the proposed run-off wording should all be properly considered.
What happens if I simply cancel my PI insurance when I stop trading?
If your Professional Indemnity Insurance ends when the business closes, there may be no policy available to respond to a covered claim first made afterwards.
That could leave former principals, partners or directors having to deal with the cost and disruption of a historic professional allegation without the insurance arrangements they expected to have behind them.
Run-off insurance is intended to maintain protection for covered historic work during the insured period.
Does PI run-off insurance cover new work after retirement?
Normally, no.
Run-off Professional Indemnity Insurance is intended to cover eligible historic professional activities undertaken before the agreed cessation date. It is not designed to insure new professional work carried out afterwards.
If you intend to remain involved as a consultant, undertake occasional assignments or continue giving professional advice after “retirement”, tell your broker before arranging run-off cover. You may require separate or amended insurance arrangements.
What happens to PI run-off insurance when a professional firm is sold?
The insurance position following a sale, merger or restructuring depends heavily on how the transaction is structured and who retains responsibility for historic professional liabilities.
In some transactions, a buyer may assume responsibility for previous work and arrange suitable insurance. In others, the seller or former entity will retain the historic exposure and require run-off insurance.
The contractual allocation of liabilities and the insurance arrangements should therefore be considered together. Run-off cover should not be assumed to transfer automatically simply because the business has been sold.
When should I arrange Professional Indemnity run-off insurance?
Ideally, start the process before you cease trading and before your current PI policy expires.
Early planning allows Champion Professional Risks to:
- understand your historic professional activities;
- review your current Professional Indemnity policy;
- consider known claims or circumstances;
- identify relevant professional-body requirements;
- discuss the appropriate run-off period and limit of indemnity; and
- consider the available annual and multi-year options.
It also gives insurers a clearer picture of the risk while your existing insurance arrangements remain in force.
If retirement, sale or closure is already planned, run-off PI should form part of your wider succession and exit planning rather than being left until the practice has already closed.
What does Champion need to provide a multi-year run-off indication?
Obtaining an initial indication can be relatively straightforward.
As a starting point, we normally ask for:
- your latest completed Professional Indemnity proposal form;
- details of past or current claims and circumstances; and
- your current Professional Indemnity policy documentation.
From there, our Professional Risks team can review the existing arrangements and discuss your proposed cessation date, the run-off period required and the options available.
Why arrange Professional Indemnity run-off insurance through Champion?
Professional Indemnity is a specialist area of Champion Professional Risks’ business.
We work with professional firms throughout their lifecycle – from arranging cover for active practices to helping owners deal with their Professional Indemnity requirements when they retire, sell or cease trading.
For eligible firms considering multi-year run-off insurance, our team can review the existing policy, historic activities and proposed run-off arrangements before approaching specialist insurers.
We can also compare the proposed run-off policy with your existing Professional Indemnity arrangements, helping you understand material differences in wording, limits and exclusions before cover is put in place.
The objective is straightforward: to help you close your professional practice with greater certainty over the historic professional liabilities you leave behind.
Frequently asked questions about Professional Indemnity run-off insurance
Can I buy six years of PI run-off insurance at once?
Potentially, yes. Champion Professional Risks can access specialist insurers capable of providing an agreed period of between one and six years under one policy, subject to underwriting, insurer acceptance and the individual risk.
Is the premium for multi-year run-off insurance paid annually?
Under our insurance arrangements the premium for the agreed policy period is established and paid at the outset rather than being renewed annually during that period.
Is multi-year PI run-off insurance cheaper?
It can be in some circumstances, but a saving cannot be guaranteed.
The cost will depend on factors including the profession, historic activities, claims experience, required policy period, limits, insurer appetite and prevailing market conditions.
Retiring or closing your professional practice? Get a PI run-off indication
If you are planning to retire, sell, cease trading or close a professional practice, speak to Champion Professional Risks before your existing Professional Indemnity policy expires.
For an initial multi-year run-off indication, we can normally start with your current PI policy documentation, latest completed proposal form and claims information.
Speak to John Jones and the Champion Professional Risks team
Telephone: 0161 515 8538
Email: jjones@ChampionInsure.co.uk
Ask us about Professional Indemnity run-off insurance for retirement, business closure or cessation of trading, including the option to secure between one and six years of cover under a single policy.
Cover is subject to underwriting, insurer acceptance and the full policy terms, conditions, limits and exclusions. Eligibility for multi-year cover varies according to the individual risk and profession. Any potential cost saving will depend on individual circumstances and cannot be guaranteed.
