Frequently Asked Questions

Clients can always appear happy when things are going well, but if they find themselves in trouble and they feel they can pin the blame on someone else they may well do so

Everyone has questions that are quite frequently proposed to us.

So we've compliled a few that may help answer some questions that you may have.

Q - I have decided to close my business down due to the downturn in business.  I have been offered a job working for a competitor but I don’t expect this to be a long term thing, I really want to work for myself again in a few years.  I am an RICS surveyor so need to buy run off cover.  Will I have to keep this policy in run off and then take out another policy when I go back to working for myself.

A - If you tell your insurer you are ceasing to trade they will endorse your policy to show that cover will no longer be provided from the date of the endorsement. This means the policy will cease to accrue new liabilities and should, depending how long you have traded for start to lose some.

Should you return to working for yourself again most insurers will simply remove the endorsement making the policy a standard fully retroactive policy. It is not unusual for insurers to further endorse the policy, to exclude claims that emanate from work between the two dates.

Q - My policy is due to renew in seven months, and I am ceasing work from the end of the current month. Do I need to buy another policy now?

A-No, you simply inform your insurer that you are to cease trading and they will ask you to confirm the date you finished trading and they will endorse your policy to say that cover will not be provided for any service or work provided after that date.

Q - I cannot see how a claim can be brought against me, all the work I undertook is done and dusted and my clients all seem happy why should I bother with Run Off?

A - Clients can always appear happy when things are going well, but if they find themselves in trouble and they feel they can pin the blame on someone else they may well do so. You may be right, it may be that it is very unlikely that a claim could be upheld against you, but if a disgruntled client brings even an unlikely case against you, they can force you to have to defend their claims and that can very quickly run into tens of thousands of pounds. PI pays for defending negligence claims and in many cases the excess does not apply to these costs if the claim is defended successfully.

Q - I am a consultant and have just ceased my contact with a major institution, whilst I was working on the contract I had to hold PI and PL insurance, they have not mentioned I need run off and I do not consider I need run off cover can you think of any reason I should not just cancel my current policy?

A - Typically, PI is none cancelable so even if you decide you don’t need PI once you have ceased to trade it is possible your insurer will maintain cover up until your next renewal. Some policies do have cancellation rights, however these are normally for the less traditional professions and there is no guarantee of a refund of premiums either in whole or pro rata.

The reason your client insisted you carry PL and PI is incase you cause them loss or injury, in the case of the PL this is more physical injury. If you do not renew your Public Liability policy and you have inadvertently caused damage to your client i.e you broke something possibly without knowing, then you PL policy should cover that even if the matter is discovered after your policy has lapsed. If however you lapse you PI policy and your client discovers negligence with your advice or your services, then you will not be covered for losses.

Your client insists you have insurance so if they sue you, you can pay. They want an easy route to recompense via insurance they don’t want the hassle of suing you and then having to pursue you for the debt.

Run Off Pi

Run Off Pi

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