In a professional indemnity insurance, a run off cover is there to safeguard you against those losses or damages which may arise after your professional or business has ceased to trade. If you have been involved in providing professional services, ongoing professional indemnity insurance is essential. Moreover, you could also remain liable for claims which may be raised against you by unhappy customers even after you retire.

If you are selling your business or retiring soon, and you have a professional indemnity insurance policy, make sure that you continue with the cover so that you can get the coverage should a claim arises in the future. Here, it is important to note that professional indemnity insurance will cover those claims and or circumstances which may arise from your past business activities. Though the coverage would be given for prior activities; no cover would be given for the future activities after the run off date.

Usually, one should hold run off cover for a minimum tenure of one year. However, it is crucial to carefully assess your exposure on the basis of various potential risks which may be associated with your business activities. In some cases, a claim is also filed after 15 years of act, and therefore, if you are unsure of how long should you go with your run off cover, you can take the help of SecureNow, a leading insurance broker. The team of experts at SecureNow would comprehend your policy, and after carefully analysing your requirements, the tenure run off cover would be decided.

Most of the professionals think that why should they go with a run off the cover in professional indemnity insurance for their past acts. The reality is that, even after several years, the claimant might allege that they have suffered losses due to your services. Many times, after talking to their friends or family or even mulling over the event in private, they could think that you were negligent while discharging your duties. Then they could accuse you of doing wrongful acts. Also, a fault in the building, engineering project, etc.; may take several years to come to light. Similarly, the breach of information in a house sale may take years to become clear.

Read more: How does Professional Indemnity Insurance Benefit the IT Firms?

Case

Rajiv Saran was working as an independent architecture. Considering the nature of his business activities, he bought a professional indemnity insurance. He was hopeful that the policy would offer him coverage if any of his clients filed a legal suit against him or suffered a loss due to his professional actions. He worked as an independent architecture for six years, and in this tenure, he developed a vast client base which included both private and government companies.

He was hired as the architecture by Jyoti Singh, a fashion designer, for designing her four-storeys boutique in Mumbai. It was the last project of Rajiv and after completing the work, he retired from his profession.

After four years of his retirement, Rajiv got the shock of his life, when he got a legal notice from Jyoti who held him responsible for the losses incurred by her.

It was found that Jyoti’s boutique building fell unexpectedly, and the initial investigation reports suggested that the accident happened due to faulty design map. Jyoti filed a case against Rajiv for the negligence of acts and demanded Rs 5 crore as compensation.

When the case reached the court, the verdict was given in favour of Jyoti and Rajiv was asked to pay compensation.

Read more: How is Claim Processed in Professional Indemnity Insurance?

Here, luckily, Rajiv had a professional indemnity insurance which had run off the cover. He had already informed the insurer after receiving the claim letter.

Run off cover offered coverage for those acts of Rajiv also which happened before his retirement. The insurer not only paid compensation to Jyoti but also covered legal expenses incurred by Rajiv.