The definition of run-off insurance
Run-off insurance or run-off cover refers to a form of coverage under which an insurance company pays claims against a business after it closes and ceases operations.
Coverage Against Future Loss
Run-off insurance represents a type of insurance against future loss. Under a "claims made" basis, insurance does not cover a business after the policy expires, leaving the business vulnerable if claims are made after the expiration date, according to Coulson Pritchard Associates.
Run-off coverage provides needed protection if the claim occurs during a stated run-off period. According to Coulson Pritchard Associates, a customer should hold a run-off policy until the likelihood of claims no longer exists.
Limitations Period for Claims
Claimants typically have six years to file claims after the date of their loss or breach of contract, according to Coulson Pritchard Associates. Businesses should keep this in mind when they consider how long to extend their run-off coverage,