RUN OFF COVER EXPLAINED

Are you thinking of selling your business or retiring? Some insurance policies are called ‘claims made’, for example:Professional Indemnity Insurance. Put simply, in order to trigger the policy, the claim must be made against you and reported to the insurer during the policy period. Once you no longer have a need for the policy, to ensure cover for incidents which have occurred in the past, ‘run off’ cover is necessary.
We have many clients who receive notice of a claim against them well after the incident has occurred, sometimes years down the track.
Many take the dangerous risk that nothing will happen:
“I’m only a small business” or
“I didn’t earn much in the last few years”
It’s important to consider the following real life examples…
Mr X had been a successful consultant completing equipment inspections including certification inline with Australian safety standards. Mr X retired in 2013 and made the decision not to take run off cover. In 2015 Mr X had his happy retirement rudely interrupted when he was served with a Writ.

A tragic workplace accident resulting in a death had occurred in 2011. Mr X was legally pursued as a contributor on the grounds the accident was caused by equipment failure, due to non-compliant
modifications, which Mr X had inspected and certified. With no run off cover, Mr X was left to defend his position at his own expense. However had he made the decision to take run off cover, this would have provided protection by way of defence costs and/or any resultant settlement for Mr X’s liability.

Mr Y was an electrical engineer forced into early retirement through illness. As he was no longer working, he felt he had no need for continuing insurance cover, despite advice from his insurance broker that he should consider taking out run off cover. A church hall burnt down and the cause of the fire was traced to a heating system in the hall, which Mr Y had designed some years earlier. Mr Y was served with a Writ alleging his heating system design was negligent and had caused the fire, therefore seeking to recover the cost of rebuilding the church hall. Mr Y had no run off insurance to protect against his potential liability.
If you are thinking of selling your business or retiring, talk to your Account Manager about whether a ‘run off’ policy is relevant to you.

Want to know more, please contact:
BJS Insurance Brokers Pty Ltd
Toll Free: 1800 335 184
Email: architects@bjsib.com.au