Professional Indemnity

Why professional liability doesn’t end when a business does

01 May 2026

A guide to understanding run-off cover for professional services firms.

When a professional services firm closes, merges, or is sold, many assume their insurance ends at the same time. In reality, professional liability can continue for years after work has been completed.

Advice given today might only be challenged long after a project finishes or a transaction completes. Without the right protection in place, former partners, directors and advisers could face claims personally – even after they’ve moved on from the business. This is where run-off cover comes in.

As deal activity increases and regulatory expectations evolve, understanding how run-off insurance works is essential for firms planning exits, succession or M&A transactions. We’ve also just launched the first ever multi-year run-off solution, which delivers a much simpler and cost-effective way to manage these risks.

What is run-off cover and when is it needed?

Run-off insurance is a form of professional indemnity (PI) insurance that protects firms and individuals against claims made after a business stops trading, for work carried out in the past.

In simple terms, run-off cover ensures past work remains insured even when the firm itself is no longer operating.

This is typically needed when:

a professional retires
a firm is sold or acquired
a firm closes or enters insolvency
partners separate or restructure
a merger leaves legacy liabilities behind.

How does run-off cover work?

Run-off works on a claims-made basis. This means the policy in place when a claim is made (not when the work was completed) is the policy that responds. For example, if a project completes in 2021 and a claim arises in 2026, insurance must still be active in 2026 for cover to apply.

Once a firm stops trading, its annual PI policy normally ends. Without run-off cover, there may be no insurance in place to respond to future claims arising from historic work.

Run-off insurance maintains that protection for a defined number of years, covering legal defence costs and potential damages linked to past services.

Who needs run-off cover?

Run-off cover is relevant for any professional services business exposed to long-tail liability risks, including:

Surveyors, architects and engineers
Accountants and financial advisers
Solicitors and legal professionals
Management consultants
Regulated professionals providing advisory services

In many sectors, maintaining run-off cover is not only prudent risk management but may also be a regulatory or contractual expectation.

Why run-off matters during business change

Moments of transition, such as retirement, succession planning, mergers or acquisitions, often bring historic liabilities into sharper focus.

Unresolved exposure to past work can:

delay transactions
complicate valuations
increase escrow requirements
create ongoing obligations for sellers
introduce uncertainty for buyers and investors

Effective run-off cover helps remove these barriers by clearly separating past liabilities from future operations. The result is greater confidence for all parties, paving the way for smoother, cleaner business transitions.

The challenge with traditional run-off insurance

Typically, run-off cover is arranged on an annual basis. Firms will renew their policy each year for several years after closing or completing a transaction.

While this approach provides protection, it also introduces ongoing uncertainty. Premiums can change year to year, while former owners and advisors remain involved longer than anticipated, managing renewals and monitoring legacy risks long after a deal or business closes.

A new approach: multi-year run-off cover

Find out more about our multi-year solution

Our team has developed an exclusive multi-year PI run-off solution designed specifically for professional services firms involved in M&A activity.

Instead of renewing cover annually, firms can secure up to six years of run-off protection under a single policy.

It means firms can get long-term protection upfront, providing certainty at the exact moment stability and closure matter most.

Key benefits include:

one policy covering up to six years of historic liability
no annual renewals, reducing administration and uncertainty
cost certainty, with pricing agreed upfront
cleaner post-transaction exits, so sellers and advisers can move on with confidence.

Find out more about our multi-year solution