I have perm job offer so I’m no longer contracting and am closing down my Ltd company, and therefore cancelled my Indemnity insurance.

Now, I didn’t screw anything up or breach my contract and there’s no suggestion that anyone will ever make a claim against me but my insurer has told me that without the insurance in place, I will not be covered if my ex-client makes a historical claim against me, from the period when the insurance was in place.

One option is to keep the insurance in place at a 15% discount but that essentially means paying out £40 a month on a ‘just-in-case-something-highly unlikely-happens’ basis, which seems daft.

Anyone else been in this position – what decision did you come to?

Moved to Australia 😉

Only joking there think we have had variable indemnity at work (small consultancy) for specific jobs – the job was insured not the time

my insurer has told me that without the insurance in place, I will not be covered

That’s correct.

Often you have to run the policy for another year and then at the discretion of the PI underwriter, you can get a ‘Run off’ policy covering 1-5+ years.

A few of my clients have just crossed their fingers and others have gone down the insurance route (often architects/engineers).

Correct. It’s due to the way the policy is written (the “trigger”) which is on a Claims Made basis. What this means is that it covers Claims Made against you when the policy is running.

So if you cease to trade, you may still need run-off cover just in case you’ve done a whoopsie. Best to get this from your existing insurer IIRC so cover is seamless. 15% discount seems a bit low I think.

But surely if the company is wound up, there is no longer an entity to be liable???

But surely if the company is wound up, there is no longer an entity to be liable???

I remember when I went through the same thoughts as the OP, and decided that the above covered us. In the end, got another contract instead.

Depends on what sort of claim it is.

@OP – Marketing industry? Can you think how you might be sued under the PI policy – i.e., what’s the extent of the advice you’ve given and could it have resulted in a financial loss?

If the answer is Not Much and No, then just lapse the policy and wind the company up. If more serious than that then maybe worth considering.

But surely if the company is wound up, there is no longer an entity to be liable???

+1 I thought the whole point of Ltd company is to take away personal risk so only the company’s assets are ever used.

Nothing to do with Indemnity Insurance but when I closed down my Ltd Company I foolishly left £35 in the company bank account which some how the Inland revenue nicked and I couldn’t get back. Can’t remember the exact details but make sure you empty the bank account before closing down the company.

+1 on working how to get run off cover at a reasonable price.

I thought the whole point of Ltd company is to take away personal risk so only the company’s assets are ever used.

Yes. And no. The law on this can be quite complex, so sadly it isn’t a watertight solution.

teef – Member
Nothing to do with Indemnity Insurance but when I closed down my Ltd Company I foolishly left £35 in the company bank account which some how the Inland revenue nicked and I couldn’t get back. Can’t remember the exact details but make sure you empty the bank account before closing down the company.

Never underestimate the ability for Revenue to nick money off you or your company.

Another slightly off topic but related in this area is what happens if you wind up your company but the gov does one of those classic “was legal, now it’s illegal” changes and makes it wonderfully retrospective so you are penalised for something in the past. Can they go after the former directors of the company? Used to be contractors occasionally wound up their companies and started a new one to try to throw HMRC off the scent but I’d heard they can still go after you, just less likely to happen.