Run-Off Cover Malaysia: Cover After You Stop Trading
You sign the share sale in March. Your professional indemnity policy runs out in June and nobody renews it, because there is nothing left to insure. In November, a client you finished with two years ago sends a letter of demand about that work.
There is no policy to notify, and the defence costs are now yours personally or the buyer's problem, depending on what you signed.
This page is about run-off: what keeps a liability policy answering for old work after the business stops, changes hands or moves insurer. It covers professional indemnity, technology errors and omissions, cyber liability and directors and officers cover in Malaysia.
Key Facts: Run-Off Cover in Malaysia
What is run-off cover? It is the arrangement that lets a liability policy keep responding to claims about work you already finished, after the policy would normally have ended. On a claims-made policy the claim has to arrive while cover is in force, so when cover stops, the old work stops being covered too.
Who needs it? Anyone winding up, selling, merging, going dormant, or leaving a profession, plus anyone whose client contract asks for cover to be kept up for a set number of years after delivery. Consultancies, agencies, software vendors, accounting and advisory firms meet it most often.
What drives the cost of run-off cover? It is priced as a multiple of your annual premium rather than as a separate rate. One Malaysian technology professional indemnity wording currently in the market, 2025 edition, offers a supplementary extended reporting period at up to 100% of annual premium for one year and up to 175% for three years, at clause 5.16.
Is run-off cover required in Malaysia? No statute requires it. Where the requirement exists it comes from a client contract, a share sale agreement or a professional body's own rules, which is why the number of years is negotiable before you sign and fixed afterwards.
What is the deadline that decides this? Under the wording referenced above, a supplementary extended reporting period has to be requested and paid for within 30 days after expiry. Miss that window and the option is gone, whatever you are willing to pay.
Last verified: September 2026. Checked against the Companies Commission of Malaysia striking-off guidelines dated 16 April 2025 and a Malaysian technology professional indemnity wording currently in the market, 2025 edition.
Closing, selling or letting a policy lapse in the next few months?
Talk to us before the expiry date, not after it. This sits around professional indemnity insurance, and the answer usually costs less than people expect.
Why your policy stops covering old work on the day it expires
A claims-made policy answers claims that are brought against you while it is in force. It does not answer claims that arrive later about work done earlier, which is the opposite of how most business owners assume insurance works.
That is the whole reason run-off exists. The gap is not created by an exclusion, it is created by the trigger, and it opens the moment the last policy ends. We set the two triggers side by side in our guide to claims-made and occurrence cover.
The table below shows how the common Malaysian commercial covers are usually written, and whether a run-off question arises when you stop buying them.
| Cover | Usual trigger in Malaysia | Does run-off arise? |
|---|---|---|
| Professional indemnity | Claims made | Yes, and this is where it is asked for most |
| Technology errors and omissions | Claims made | Yes |
| Cyber liability | Commonly claims made | Yes, and the notification clauses differ a lot between wordings |
| Directors and officers liability | Claims made | Yes, and it is the one most often forgotten in a sale |
| Public liability | Occurrence | No. The policy in force when the injury happened is the one that answers |
One thing follows from the last row. If somebody tells you that you need run-off on your public liability policy, check the trigger before you pay for anything, because you may be buying a solution to a problem you do not have.
The three routes, and what each one costs you
A run-off need can be met three ways. They are not equivalent, and the order below is roughly cheapest to most expensive.
This table shows the mechanics as they appear in a Malaysian technology professional indemnity wording currently in the market, 2025 edition. These are contractual terms in that wording, not a quotation and not an indication of what you will pay.
| Route | How it works | Cost basis in the wording | Who it fits |
|---|---|---|---|
| Keep renewing, retroactive date intact | The current policy keeps picking up the old years, because the retroactive date has not moved | Your ordinary annual premium | Anyone still trading, including a business that has shrunk |
| Basic extended reporting period | Clause 6.1.1: where the policy is not renewed, a circumstance may still be notified within 90 days after expiry | Included in the policy | Nobody, as a plan. It is a short grace period, not run-off |
| Supplementary extended reporting period | Clause 5.16: bought after expiry, extending the time in which claims may be brought about past work | Up to 100% of annual premium for one year, up to 175% for three years. Fully earned and non-refundable | A business that has genuinely stopped, or one selling and being asked for a fixed tail |
Read the middle row twice. Ninety days is a window for telling your insurer about a problem you already know about, not a year of protection, and a contract asking for two or six years of run-off is not satisfied by it.
The cheapest answer is usually not to buy run-off at all
Under the wording referenced above, the supplementary extended reporting period is not available where you have taken out another claims-made policy with a retroactive date equal to or earlier than the expiring one. The insurer is not being difficult. The new policy already reaches back over the same years, so there is nothing left for a tail to do.
That condition is worth more to most readers than the price list. If you are still trading and you move insurer while keeping the retroactive date where it was, your old work travels with you. Our page on the retroactive date sets out how to protect it at a switch.
This table matches the common situations to the route that actually applies.
| Your situation | Do you need to buy run-off? | What to do instead |
|---|---|---|
| Still trading, changing insurer at renewal | Usually no | Get the new policy issued with a retroactive date equal to or earlier than the old one, and check the schedule when it arrives |
| Still trading but revenue has collapsed | Usually no | Renew at a lower turnover figure. A small renewal premium is normally cheaper than a tail priced off the old one |
| Company going dormant, may restart later | Depends | Ask your insurer whether a dormant or nil-turnover renewal is available before you let the policy lapse |
| Winding up, striking off, or retiring | Yes | Request the supplementary extended reporting period inside the window, and decide the number of years before you request it |
| Selling the business | Usually yes, and read the agreement | The sale agreement often names the years and who pays. Settle that during the deal, because after completion you are asking a favour |
Closing the company does not close the exposure
Striking a company off is an administrative step with a clean end point. The Companies Commission of Malaysia describes the moment it takes effect in its guidelines for applications under section 550 of the Companies Act 2016:
"Upon publication in the Gazette pursuant to subsection 551(3) of the Act, the company shall henceforth be dissolved."
Source: Companies Commission of Malaysia, Guidelines for Application to Strike a Company Off the Register Under Section 550 of the Companies Act 2016, 16 April 2025.
The registrar removing a name is not the same thing as every claim about that company's past work disappearing. Whether a particular dispute can still be pursued, and against whom, is a legal question that turns on the facts and belongs with a lawyer rather than an insurance page. What is not in doubt is the insurance side: once the policy has expired and no extended reporting period was bought, there is nothing to notify and nobody paying defence costs.
Directors carry their own version of this. Directors and officers cover is claims-made as well, so a company that stops buying it leaves its former directors relying on whatever the sale agreement or the constitution promised them. Our guide to directors and officers liability insurance covers how that cover behaves and what defence costs do to the limit.
The table below maps the common business events to what happens next.
| Business event | What happens to the claims-made policy | The usual answer |
|---|---|---|
| Members voluntary winding up | It runs to expiry and then stops | Buy the tail while the company still exists and can still pay for it |
| Application to strike off under section 550 | Same, and the company is gone once the dissolution is gazetted | Sort the insurance before the application, not after |
| Share sale | The company and its policy usually continue under new ownership | Check who controls renewal after completion, and whether the retroactive date survives the buyer's insurance review |
| Business or asset sale | The liabilities often stay with the seller's company | Run-off on the seller's policy, with the term agreed in the sale documents |
| Partner or director retires | The firm's policy continues, the individual may drop out of it | Confirm in writing that past acts of the retiring person stay covered under the firm's renewals |
A buyer's lawyer has asked for six years of run-off and you do not know what that costs
Send us the clause and the expiring schedule. You will get back what the wording allows, what it is priced against, and whether continuing cover would satisfy the same clause. We handle this alongside SME business insurance for owner-managed firms.
What the wording actually says, and what it means for you
Four terms in the referenced wording decide how this goes. Each one has caught somebody out.
| Term in the wording | What it means for you |
|---|---|
| Clause 5.16: requested and paid for within 30 days after expiry | The decision has to be made in the month after the policy ends, usually while you are busy with everything else that comes with closing or selling |
| Clause 5.16: fully earned and non-refundable | You cannot buy three years, change your mind after one, and get money back. Pick the term deliberately |
| Clause 5.16: not available where a replacement claims-made policy has an equal or earlier retroactive date | If you are still trading and still buying cover, you probably cannot buy a tail and probably do not need one |
| Clause 6.1.1: 90 days after expiry to notify a circumstance | If something went wrong before expiry and you know about it, tell the insurer inside that window even if you are still deciding about a tail |
Your own wording may say something different. Clause numbers and terms move between insurers and between policy years, so read your schedule and your endorsement pages rather than assuming the figures above apply to you.
Five things that go wrong
These are the failures that turn a manageable cost into no cover at all.
| Mistake | What it costs | How to avoid it |
|---|---|---|
| Letting the policy lapse first and asking about run-off later | The purchase window can close while you are still getting quotes | Start the conversation 60 days before expiry |
| Agreeing a tail length in a contract without checking what the wording offers | You may have promised a term your insurer does not sell | Check the available terms before signing, and see our page on negotiating an insurance clause |
| Taking a cheaper replacement policy with a later retroactive date | The old years fall out of cover, and the tail you could have bought may no longer apply cleanly | Treat the retroactive date as a term to be matched, not a detail on the schedule |
| Buying run-off on the wrong policy | Money spent on an occurrence policy that never needed it, while the claims-made one lapses | Check the trigger on each policy first |
| Forgetting the directors and the cyber policy | Professional indemnity gets a tail and the other claims-made covers quietly end | List every claims-made policy the business holds, including cybersecurity insurance, before the first expiry date |
If your insurer says the request arrived too late
Timing is what these arguments turn on, and dated correspondence is what settles them. Keep the email in which you asked, not just the one in which they answered.
A small Malaysian business that cannot resolve a dispute with a licensed insurer can take it to the Financial Markets Ombudsman Service, which describes itself as "a consolidated entity of OFS and SIDREC that acts as an alternative dispute resolution channel for financial and capital market disputes involving direct financial losses". Eligibility and the monetary limit are set by the Rules of the FMOS, and both depend on the size of your business, so check the current Rules before assuming your firm qualifies.
Do that check early rather than at the point of disagreement. A larger firm falls outside the scheme and has to resolve the same dispute another way.
FAQ
What is run-off cover in insurance?
Run-off is cover that keeps answering claims about work already finished, after the business has stopped trading, been sold, or stopped buying the policy. It matters on claims-made policies such as professional indemnity, technology errors and omissions, cyber liability and directors and officers cover, because those respond to claims brought while the policy is in force rather than to events during a policy year.
How long should run-off cover last in Malaysia?
There is no statutory answer. The term is normally set by whatever created the obligation: a client contract, a share sale agreement, or a professional body's rules. Where nothing sets it, the sensible approach is to look at how long after delivery your kind of work typically produces complaints, and to take advice on the limitation position for your specific situation before choosing a number.
What does run-off cover cost in Malaysia?
It is priced as a multiple of your annual premium rather than as a separate rate. One Malaysian technology professional indemnity wording currently in the market, 2025 edition, offers a supplementary extended reporting period at up to 100% of annual premium for one year and up to 175% for three years, at clause 5.16. Other wordings differ, so read your own schedule.
Can I avoid buying run-off cover?
Often, yes. In the Malaysian technology professional indemnity wording referred to on this page, 2025 edition, the supplementary extended reporting period is not available where you have taken out another claims-made policy with a retroactive date equal to or earlier than the expiring one, because the replacement already reaches back over the same years. A business that keeps trading and keeps the retroactive date intact usually does not need to buy a tail at all.
Do I need run-off cover on my public liability policy?
Normally no. Public liability in Malaysia is written on an occurrence basis, so the policy in force when the injury or damage happened is the one that answers, even if the claim arrives years later. Check the trigger wording on your own schedule before paying for anything described as run-off on that policy.
What happens to claims if my company is struck off?
Striking off ends the company once the dissolution is gazetted, under the Companies Act 2016 process the Companies Commission of Malaysia sets out for section 550 applications. Whether a particular claim can still be pursued afterwards is a legal question for a lawyer. On the insurance side the position is simpler: if the policy has expired and no extended reporting period was bought, there is no cover to notify and no insurer paying defence costs.
Is run-off the same as an extended reporting period?
In practice people use the words for the same thing, but policies use the technical term. A basic extended reporting period is a short grace period included in the policy, often around 90 days, for notifying something you already know about. A supplementary extended reporting period is the purchased extension that does the job a contract means when it asks for run-off.
Contingent Conclusion
Run-off is not a product you shop for, it is a decision with a deadline attached. The expensive version is buying a tail you did not need, and the ruinous version is missing the window and having no cover for years of finished work.
Start with the trigger on each policy, then the retroactive date, then the question of whether you are genuinely stopping. If you are carrying on in any form, continuing cover with the date preserved is usually both cheaper and better than a purchased tail. If you are stopping, put the run-off decision in the same list as the accountant and the lawyer, and put it before the expiry date rather than after it.
Contingent helps Malaysian businesses get the cover their contracts and landlords require. Whether you're comparing options or checking whether your existing policy actually does what the contract asks, we can help.
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Related reading: our guide to professional indemnity insurance in Malaysia, claims-made versus occurrence cover, and the retroactive date.
Primary sources: the Companies Commission of Malaysia guidelines for striking a company off the register under section 550 of the Companies Act 2016, dated 16 April 2025, and the Financial Markets Ombudsman Service for the Rules of the FMOS.
Published by Contingent, the commercial insurance brand of Emerge Insurtech (Malaysia) Sdn. Bhd.
Disclaimer: This article describes how these policy terms commonly operate in the Malaysian market as of September 2026, with clause references drawn from wordings currently in use. Wordings differ between insurers and between policy years, and endorsements can delete or amend any clause described here. Always read your own schedule and endorsement pages, and consult a qualified insurance professional before relying on any of it.
