PI Run-Off Cover UK: Closing, Retiring or Dissolved Firms

Why does run-off cover matter when you stop trading?

Here is the uncomfortable truth most professionals only discover too late: your liability doesn't end when your business does. If you provide advice, design or professional services and you close your firm, retire, sell up, or simply move to employment, you can still be sued years later for work you completed while trading. And because professional indemnity insurance works on a "claims-made" basis, the policy you held when you did the work won't help — only a live policy at the moment the claim is made responds. Cancel your PI the day you close, and a claim that lands eighteen months later finds you with no cover at all.

Run-off cover is the solution to that gap, and getting it right is exactly the kind of fiddly, easily-botched placement where a specialist broker earns their fee rather than a price-comparison site. At Miller & Partner we place professional indemnity and run-off cover for professionals winding down, and treat these complex, easily-mishandled risks with the care they need. This guide explains how claims-made cover works, what run-off does, how long you need it, and the retroactive-date traps that catch people out when they switch or stop.

Why does "claims-made" change everything?

Almost all UK professional indemnity insurance is written on a claims-made basis, and understanding that one phrase is the key to everything else in this guide. A claims-made policy responds to claims that are first made against you and notified during the policy period — not claims relating to when the work was done. Compare that with most other business insurance ("claims-occurring"), where the policy in force when the incident happened responds, even years later.

The consequence is profound: with claims-made cover, the policy that protects you is always the one live at the moment the claim arrives. So if you finish a project in 2025, cancel your PI when you close in 2026, and a negligence claim lands in 2028, you have no cover — even though you were fully insured when you actually did the work. PI claims are "long-tail" liabilities: they routinely surface months or years after the work, and a meaningful proportion arrive more than three years later. That long tail is precisely why run-off cover exists.

What exactly is run-off cover?

Run-off cover (sometimes called an extended reporting provision) is professional indemnity insurance that keeps responding to claims after your business has stopped trading — whether through closure, retirement, merger, sale or insolvency. It covers claims arising from work you completed before you ceased, but which are made and notified after. It does not cover any new work (there isn't any), which is one reason run-off is often priced more keenly than a full trading policy as the years pass and the tail of exposure shrinks.

Mechanically, you usually arrange it by telling your existing insurer you've ceased trading; they endorse the policy so no new work is covered, then at renewal offer run-off terms, typically renewed year by year for the period you need. Where your existing insurer won't continue — they've exited your sector, or won't offer the term you need — a specialist broker can place run-off in the wider market. We walk through how it's priced in the pricing section below.

Run-off vs cancelling: what's the difference?

The difference between arranging run-off and simply cancelling looks like a small admin decision at the time. It is, in fact, the difference between a protected retirement and an open-ended personal liability.

Who needs run-off cover, and for how long?

In principle, anyone who has provided professional advice or services and is winding down should consider run-off — consultants, IT contractors, designers, surveyors, accountants, architects, engineers, financial advisers and many more. The period you need depends on three things: your professional body's rules, your contracts, and the realistic tail of your work.

What is a retroactive date and why does it matter?

The retroactive date is the line in the past beyond which your policy won't look. Your PI covers claims arising from work done on or after this date — anything earlier is excluded, even with a live policy. If you've held continuous, unbroken PI since you started, your retroactive date normally reaches all the way back to when you began, and you're covered for everything. The danger is breaks in cover.

Here's the trap that catches people out: if you let your policy lapse and later restart, your retroactive date can reset to the new start date — wiping out cover for all your historic work. The same risk appears when you switch insurers: unless the new policy carries over your existing retroactive date (ideally "unlimited" retroactivity), you can lose protection for years of past work without realising it until a claim is declined. Reduced activity or "pausing" cover does not preserve your retroactive date unless formally agreed.

How do you avoid a gap when switching insurers?

Switching PI insurer to get a better premium is fine — but it's one of the highest-risk moments for an accidental coverage gap, and it must be handled deliberately. The rules are simple but unforgiving: never let the old policy lapse before the new one starts; make sure the new policy's retroactive date matches or precedes the old one; and get the continuity of that retroactive date confirmed in writing. Assumptions made at switching time often only surface years later, when a claim is submitted and the gap is discovered. This is precisely the kind of detail a specialist broker checks as a matter of routine — and a comparison site simply won't.

Can you be sued personally after closing?

Yes — and this is the consequence that makes run-off so important. If your business has closed and has no run-off cover, a claimant can in some circumstances pursue the individual professional personally. The well-known case of Merrett v Babb established that a professional can be held personally liable for negligent work even where the firm they worked for no longer provides a route to recovery. For a former sole trader, partner or director, that can mean defending a claim — and potentially paying damages — out of personal assets, years into retirement. Run-off cover is what stands between your past work and your personal savings.