01 / The meaning
What it means.
Closing a company, retiring or selling a practice does not mean all potential allegations disappear. A client may discover an alleged error later, when an ordinary annual policy is no longer in place. Run-off arrangements generally focus on the agreed historic activities, rather than insuring new work performed after the cessation date. Entity changes, acquired businesses and former directors can require separate attention.
The duration, retroactive date, covered people and definition of prior work must be agreed explicitly. Some arrangements are renewed annually; others provide a specified reporting period, with different effects. They may share one aggregate limit across several years. Do not assume run-off is automatic or that a fixed number of years is suitable for every exposure. ASIC’s guidance discusses availability in the particular context of AFS licensees, not every business.
02 / Put it in context
A practical example.
Hypothetical example: an engineering consultant retires and asks about cover for future allegations concerning completed projects. It supplies its project history, identifies outstanding complaints and checks the proposed cessation date, insured entity and notification arrangements before cancelling existing insurance.
This example illustrates the term. It does not predict a claim outcome.
03 / Read the detail
What to check.
- Confirm the historic activities, entities and people included in the arrangement.
- Check duration, retroactive date and whether one limit applies across the whole period.
- Assess outstanding circumstances and future records access before the business closes.
04 / Start a useful conversation
A question for your broker.
If an allegation arrives after we stop trading, which specific policy arrangement could address our earlier work?
05 / Connect the terms
Keep the meaning in context.
06 / Apply it to your business
Related insurance guides.
Further reading
Read the source guidance alongside the relevant policy wording.
General information only. This does not take into account your objectives, financial situation or needs. Before acting, consider whether the information is appropriate for you. Cover is subject to insurer acceptance and the policy terms, conditions, limits and exclusions. Read the Financial Services Guide and the relevant PDS (where applicable) and/or policy wording before deciding.
Let’s start with your business
A clearer conversation
about your insurance.
Tell us what you do, what has changed and what you need to understand.