Run-Off Insurance Calculator for Law Firms
Closing your practice? Use our run-off calculator and get peace of mind for your next chapter.
The basics
What is run-off cover?
A regulatory requirement, run-off cover is insurance for claims made against a law firm after it has stopped doing business. It makes sure that clients can be compensated for claims made after a firm has closed and retired partners of the firm have financial security and won’t be personally liable for any claims. Run-off cover will be provided by the insurer covering the practice at the time of cessation.
How long do I need it for?
Cover lasts for six years after the firm’s professional indemnity insurance has ended.
What will it cost?
You can find out how run-off premiums are calculated by referring to your insurance documents or speaking to your broker. Existing Travelers professional indemnity customers can obtain an indicative price by using our calculator.
What about the excess?
Any excess under the policy will apply to the run-off cover unless otherwise agreed, and you will be liable for that excess in the event of a claim.
The Annual Aggregate Excess will increase pro rata in line with the six-year run-off period. For example, a £5,000 excess capped at £15,000 for an annual policy will be capped at £90,000, in line with the extended policy term.
Risk management
Keeping your legacy safe
If you do not obtain proper consent from clients about where they want their money and papers to go, you could act in breach of trust, breach confidentiality and become subject to a complaint by the client to the Legal Ombudsman Service. There could also be disciplinary consequences.
Make sure that closed files are archived and destroyed promptly where appropriate. Also ensure that clients' confidentiality is protected, a duty that continues after a client's matter has concluded. Files and papers should be stored securely to protect confidentiality and to safeguard any money or assets.
Resources
Best practice
What are the next steps?
Notify former clients
Notify any former clients who may be affected, for example those who have appointed you executor in a professional capacity and those clients for whom you hold documents, such as wills or title deeds. That may be an opportunity for them to collect such documents and reduce your future archiving cost.
Review undertakings
You will need to review all outstanding undertakings and, so far as possible, take any necessary action to discharge them.
Deal with client monies
You should endeavour to deal with all client money by, for instance, sending money to clients or others, paying counsel, and billing for your outstanding costs. Any withdrawals must be in accordance with the SRA Accounts Rules.
You must also deal promptly with any monies remaining in the client account or received after your practice closes.