What is ‘Retired and Run-Off’ Cover?

‘Retired and Run-Off’ insurance cover is a type of insurance that provides protection for claims made against a company after the company has ceased operations.

Upon the notification of your company winding down, or if you have since retired from the profession. Trafalgar Risk Management will offer all clients the option to purchase a Retired and Run-Off policy,

The ‘Retired and Run-Off’ policy is an extension of the Professional Indemnity policy, which is provided by Trafalgar Insurance Company Limited only, and does not include an extension of any of the additional insurances offered through Trafalgar.

Here’s a detailed breakdown of what this insurance entails:

Key Features and Purpose

1. Coverage After Operations Cease:
   • This insurance continues to provide coverage for claims made after the company has shut down or after a particular business activity has been discontinued. It’s particularly relevant for companies that are winding down operations, merging, or being acquired.
2. Claims-Made Basis:
   • Typically, this insurance is written on a "claims-made" basis, meaning it covers claims made during the policy period, regardless of when the wrongful act occurred, provided the act happened after the retroactive date specified in the policy.
3. Extended Reporting Period (ERP):
   • Policies often include an extended reporting period (ERP), which allows claims to be reported after the policy has expired. This is crucial for retired professionals or closed businesses as it provides a safety net for late-arising claims.

Common Uses

• Business Closure or Sale:
  • When a business is sold, closed, or merged, Retired and Run-Off Insurance ensures that the liabilities incurred before the transition are still covered.
• Retirement:
  • Professionals retiring from practice, such as Accountants, IT Consultants, or Health & Safety Officers, may use this insurance to protect themselves from claims that arise after their retirement but pertain to work done during their active years.

Benefits

• Peace of Mind:
  • Provides assurance that liabilities will be covered even after the company or individual ceases operations or retires.
• Legal Defence:
  • Covers legal defence costs, which can be significant, even if the claim is unfounded.
• Financial Protection:
  • Protects personal assets from being used to settle claims.

Considerations

• Policy Duration:
  • The length of the extended reporting period and the specific terms of the coverage that is offered to clients of Trafalgar via the Professional Indemnity insurer ‘Trafalgar Insurance Company Limited’ is 6 years. During this period, the named company or individual would be covered against claims arising, after the company ceased trading.
• Coverage Limits:
  • Ensure that the coverage limits are adequate to protect against potential claims, which could be substantial. When purchasing the ‘Retired and Run-Off’ policy through the Trafalgar Portal, there are multiple levels of cover options to select from, ranging from £50,000 - £1,000,000.
• Cost:
  • The cost of Retired and Run-Off Insurance can be high, reflecting the risk that insurers are taking on for an extended period. However, if you are already a client of Trafalgar Risk Management, with an expiring Professional Indemnity policy, but have since ceased trading, then these rates are heavily discounted.

Overall, Retired and Run-Off Insurance is a crucial component for businesses and professionals planning to wind-down operations, ensuring they are protected from unforeseen liabilities that may arise after they cease their activities.

If you have any queries or would like some further information on the policy offered through Trafalgar, please get in touch with us on trmadmin@trafalgar.uk.com or 0333 8 000 000.