Run Off Pi

How long does an architect need to remain covered?

PII covers liability in both contract and tort, making this question very difficult; indeed there is no definitive answer, however below is some brief guidance¹:

1. Contract: Under the law in England and Wales liability under the appointment contract for each project is either 6 years (simple contracts) or 12 years (deeds) from the architect’s last action on a project. For the longest length of run-off cover this is measured from the project with the most recent last action date. This will inevitably take the insurance into the seventh or thirteenth year. The six-year period also coincides with the ARB requirement.
2. Tort: For tortuous liability in England and Wales the period must be calculated with reference to The Limitation Act 1980 and The Latent Damage Act 1986. The net result on liability periods for negligence actions in tort is the operation of the 15 year long-stop provisions of the 1986 Act.

2.7 A member who ceases to be engaged in public practice in the United Kingdom or the Republic of Ireland must use his best endeavours to ensure that he is covered by arrangements which satisfy these regulations for at least two years from the date he ceased in public practice. The terms and extent of any cover must be equivalent to that provided by his firm’s previous qualifying insurance.

2.8 When a firm ceases the members in practice in that firm at the date of cessation shall ensure that there is in place appropriate cover to meet requirements of regulation 2.7 for at least 24 months following the cessation of the practice. Thereafter the members in practice in that firm shall use their best endeavours to ensure cover is in place to meet requirements of regulation 2.7 for a further four years. The terms and extent of the cover must be equivalent to that provided by the firm's previous qualifying insurance.

(Regulation 2.8 is effective from 1 October 2002.)

It is extremely important that you secure ‛run off’ cover for your previous practice after you cease to practise. This is to cover you for claims for work done while in practice but arising after the practice ceased. Such cover is a requirement of these regulations and it is in your own interests, whether or not you think you might have a claim in future. If your practice has been taken over by someone else this cover may be effected by the new practice or by you.

You should maintain this cover for at least two years and at the end of that period you should carefully consider whether you need to continue cover. This will depend on whether you have had, or expect to have, any claims since you ceased practice. It is the ICAEW's recommendation that you should maintain run off cover for at least six years.

A member who keeps a practising certificate after ceasing in public practice is required by these regulations to have run off cover in accordance with regulation 2.7.

There is further guidance in chapter 6 about what to do in the case of other practice changes.

To ensure that firms and members are not exposed during the period following ceasing to trade, RICS advises run-off cover for an absolute minimum of 6 years.

ACCA: Cessation of practice Those ceasing to practise must make arrangements for the continued existence of PII and FGI for a period of six years. This is due to the fact that claims can be made at a later date for work undertaken whilst a member was in practice.

Multiyear run off policies available for ACCA members; without the stringent criteria, and a flexible approach in calculating the premium. Many will suggest 250% of the last year’s trading premium however, if you had been overpaying than this would not be a fair method to use.

Other associations to be added shortly.