Firstly have a look at the question “What does ‘claims made’ mean?”.
Because most liability policies, including Professional Indemnity work on a ‘claims made’ basis, this means that you will have a risk of a claim being made against you for a period of time after you’ve provided the service / completed the work.
In some industries this could be years after the work has been completed whilst for other types of work it would be expected to occur within a shorter timeframe.
For example, the results of a marketing campaign may be known within months as to whether it was successful or not, whereas a mistake in a tax return by an accountant may only be noticed several years after the return is filed.
When your business, contracting or consultancy work is on-going your current liability policy will provide cover for a claim relating to your previous work, but only back to the retroactive date*. When you stop providing your business services, whether it be that you stop working, shut down your business, retire, take a career break or change the type of services you provide, you will still have an on-going risk of a claim being made from previous work.
In this type of situation you can purchase what is called run-off cover. Run-off cover is usually cheaper than having to renew the same policy to recognise the fact that your risk of a claim has reduced now that you have stopped working.
GSI Direct has pre-determined run-off rates:
- 50% of your annual premium in the 1st year of run-off.
- 25% for each year thereafter.
But, you must have purchased insurance through GSI Direct whilst your business was operating, and not had any claims made against you.
* With GSI Direct we have an unlimited retroactive date meaning all your previous work within the business description is covered.
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